Automated gauge control. Computerised control of the gap between the rolls of a rolling mill to keep metal thickness consistent.

Age hardening

A process of allowing certain alloys, notably of aluminium and some steels, that exhibit this characteristic to return to a hardened state after annealing by leaving them for a few hours or days at room temperature. See also Maraging and Air Hardening.

AHSS

Advanced high strength steel. A relatively new, and evolving, group of strong but lightweight sheet steels for the automotive industry.

Air hardening steel

Heat treatable steel which does not require quenching after heating. See age hardening.

Air tabling

A process for sorting scrap from waste. Air is blown through holes in a horizontal surface to lift a lighter fraction (e.g. plastic) from metal. See also Chopping. Also used occasionally for ore beneficiation.

AIME

American Institute of Mining and Metallurgical Engineers. Influential trade body.

AISI

American Iron and Steel Institute. Issues iron and steel statistics and reports.

Alacero

Latin American steel industry association.

Alclad

A sandwich of high-strength aluminium alloy sheet between two sheets of commercially pure metal for a combination of strength and corrosion resistance. Produced by rolling.

Algorithm

A strategy for short-term trading on volatile markets, notably futures and options, which can be automatically executed by computer. Programmes are often very complex.

Algo trading

See algorithm.

Alkaline earth metals

Group of metals in the periodic table beryllium, calcium, strontium, barium and radium.

Allotropic

Elements can exist in forms (referred to as phases of the element) with different characteristics depending on their crystal structure (that is the forms in which they solidify from a molten condition). Iron crystals at low temperatures are described as ferrite orferritic. At higher temperatures iron re-crystallises as a form of iron referred to as austenite or the austenitic phase, but some steel alloys exist in the austenitic phase over a wide temperature range. Very rapidly cooled iron or steel is amorphous, that is without a crystal structure, and has a glass-like character.

Alloy

A combination of two or more metals with its own distinctive characteristics. Alloy steel usually refers to an alloy consisting of mostly iron with small additions of other metals. Alloy steels have been developed for specific applications - for example saw blades, drills or armour. Elements commonly added include bismuth, boron, calcium, chrome, cobalt, lead, nickel, manganese, molybdenum, silicon, tungsten and vanadium (often added in the form of ferro-alloys). Stainless steels are alloys with anti-corrosion characteristics contributed by a high percentage of chrome, in most cases also substantial additions of nickel and in some cases other metals. Superalloy 'steels' (or more correctly simply 'superalloys') contain large additions of other metals to the point where the iron content is only 50% or less by weight

Alluvial deposit

Earth, sand or gravel, sometimes bearing metallic minerals, which has been washed down from the original source by water action. (See also Eluvial).

Alnico

An alloy containing aluminium nickel and cobalt. The original high-strength permanent- magnet alloy.

Alumina

Oxide of aluminium. Usually produced from bauxite as a first stage in the manufacture of aluminium. About two tons of alumina make one ton of metal. Also a refractory and an abrasive.

Aluminothermy

A process which exploits the exothermic characteristics of finely-divided aluminium and/or ferro-silicon to generate high temperatures on combustion. Used in the production of some refractory metals and ferro-alloys, also for welding. See also Thermit.

Aluminising

Coating steel with aluminium. Has similar results to galvanizing with the added advantage of heat resistance, e.g. on exhaust systems.

Aluminium-killed steel

Aluminium is one of the additions used to 'kill', that is to remove oxygen from liquid steel after the initial steelmaking process -an important consideration for certain grades of steel. Ferro-silicon and ferro-manganese are two other commonly used additions. The oxygen might otherwise form bubbles, usually by combining with carbon, which both interferes with the control of carbon content in the final product and forms potential initiation points for weakness and failure. De-oxidising is usually considered desirable in steels used for forging, in structural steels containing 0.15% or more carbon, and in all other steels containing 0.25% or more carbon.

An alloy of 89-95% copper and 5-11% aluminium with good bearing properties. Used for bushes and moving parts.

Amalgam

A combination of mercury with another metal without the application of heat.

American option

An option, normally an OTC option on physical, which can be declared at any time prior to expiration.

Amorphous steel

A non-crystalline or 'metallic glass' form of steel produced by very rapid cooling of molten steel. It displays very high magnetic permeability and very low energy loss, making it extremely efficient for the cores of transformers and for stator and rotor arms of electric motors. Its use in the past has been limited by its brittle nature and poor formability, but recent technical advances may reduce these disadvantages

AMV

Ammonium metavanadate. One of the forms in which vanadium is traded internationally.

Angles

Standard long product in steel, aluminium and other metals. The arms of the angle may be equal or unequal.

Annealing

A process of heat treatment for restoring the ductility of metals work-hardened by semi-fabrication. In steelmaking it can restore ductility lost as a result of the hardening effect of cold rolling and resolve internal tensions that could make the steel respond unpredictably to subsequent drawing or bending.

Anode

A cast, flat fire-refined shape used as the raw material in electrolytic refining. Alternatively the inert positive terminal in electrolysis.

Anodising

A process of improving the corrosion resistance of aluminium by thickening the natural oxide film on the surface. The coating may be coloured with dyes or integrally in a few colours by tailoring the composition of the alloy treated.

Anomaly

Geologists study magnetic or geophysical surveys for anomalies as the first indication of a possible ore deposit.

Anti-dumping

Special tariff or other constraint on imports deemed by the importing country to be guilty of dumping.

AOD

Argon-oxygen decarburisation. An AOD converter is a special converter for refining stainless steels. Argon and oxygen are blown through the liquid steel to reduce its carbon content. The oxygen reacts with the carbon and carries it off, mainly as carbon dioxide. Argon is an inert gas that increases the agitation of the metal (it stirs it more vigorously to speed up the reaction). It is present in the atmosphere in small quantities, and is collected from the condenser normally installed at steelworks primarily to produce oxygen for the converter.

API

American Petroleum Institute. Sets some standards for oil pipe.

Apparent steel consumpiton

Conventional measurement based on the sum of national steel output plus imports minus exports. In fact this computation is more accurately described as "apparent new supply" as it makes no allowance for either stock (inventory) accumulation or stock rundown, which would determine real consumption. It may be referred to as ADC (apparent domestic consumption)..

Approved delivery point

A location approved by an exchange for delivery of underlying asset to satisfy futures contracts.

APT

Ammonium paratungstate - principal form in which tungsten is traded internationally.

Arbitrage

An operation to lock in a temporary price advantage which involves a purchase of metal in one market with the simultaneous sale of an equivalent quantity of the same metal in another market, (eg copper on the LME and Comex). If two currencies are involved, a foreign exchange hedge is also needed to protect against any change in the parities.

Arbitration

A formal dispute resolution mechanism, usually provided by a body such as a Chamber of Commerce or the LME. Provision for arbitration is usually written into the contract to avoid the necessity for litigation.

Asian option

A cash-settled option on the average price of a given metal in a given averaging period, usually a month. Automatically exercised if in the money. See also Tapo.

Ask

A sales price placed by a market participant willing to trade.

Assay

The independent evaluation of the physicochemical composition of a metal or alloy to determine its degree of purity. Also to establish the metal content of ore or scrap. Also international standards, and some standards peculiar to futures market contracts, specify metal contents and maximum levels of impurity. Metals and ores are assayed to establish if they meet these. Independent commercial assayers are employed to ensure fair play in the international trade in steel and raw materials.

Assignment

On the LME, a notification from the clearing house that an option grantor must fulfil the terms of an option.

Associate Broker Clearing Member (ABCM for short).

A clearing broker member of the LME without Ring dealing privileges.

Associate Trade Clearing Member

A member of the LME entitled to clear its own business, but not to write client contracts or trade in the Ring.

Associate broker

Non-clearing, non-Ring-dealing members of the LME authorised to issue LME contracts.

Associate Trade Members

Members of the LME who are purely clients of broking members.

ASTM

American Society for Testing and Materials. US standards organisation.

At arm's length

A transaction between two unrelated parties. A transaction between financially-linked companies cannot be at arm's length.

At-the-money

An option whose strike price is the same as the current market price of the underlying metal.

Audit trail

A regulatory requirement for records to track the progress of a futures market order. Also a similar provision in many branches of accounting.

Austenitic

A major class of alloy steel, especially stainless. Classically 18%Cr 8%Ni, the latter is ductile, easily welded and work hardens. May contain molybdenum. See also Ferritic.

Austenite

A non-magnetic allotropic form of iron, the result of re-crystallisation of iron when it is raised to a high temperature. The iron returns to its ferritic (the usual, magnetic) form if left to cool slowly. If cooled rapidly (quenched) some of the austenite is transformed into martensite, a very hard form of iron or steel with a different crystal structure. Stainless steels containing sufficient nickel maintain the austenite crystal structure over a range from very low to very high temperatures. Hence stainless steel containing 8% or more of nickel is referred to as "austenitic". These alloys are usually referred to as '300 series' alloys, which are ductile, easily welded and work-hardened.

Authorised dealer

An individual authorised to deal on the floor of the LME for a Ring dealing broker. See also Clerk.

Autogenous grinding

A ball mill without the balls, where the ore is ground by impact on itself.

Automatic exercise

See Asian Option.

Automatic gauge control (AGC)

Modern rolling mills for flat products use equipment and software to measure the uniformity of thickness, edge consistency, flatness and surface finish of their product during the rolling process. This maintains consistency throughout the length of a coil, and can involve continuous adjustment to the roll gap between successive roll stands and to the line speed (and hence the strip tension). Similar automated quality control equipment is used to monitor long products during rolling..

The department in a brokerage or trading house where financial transactions such as futures deals are processed to ensure their fulfilment. See Matching and Clearing.

Back-up rolls

The rolls that have direct contact with a slab or coil being worked at a mill, the work rolls are subject to enormous forces. To prevent them from bending under these forces they are backed up with more massive rolls. As they are worn, work rolls have first to have their surfaces skimmed and made true again, but ultimately have to be scrapped and replaced. Back-up rolls have a longer life, as they do not suffer the same degree of wear.

Backwardation

The situation when the cash or spot price of a metal is greater than its forward price. A backwardation occurs when a tight nearby situation exists in a metal. The size of the backwardation is determined by differences between supply/demand factors in the nearby positions compared with the same factors on the forward position. There is no inherent limit to a backwardation. The backwardation is also referred to as the 'back'. A large and widening backwardation can reflect a squeeze and ultimately a corner - situations that the LME has powers to combat. See also contango.

Baghouse

Part of the environmental controls at a smelter or furnace. Cooled flue gases are passed through the baghouse to capture particulates, which may then be recycled.

Ball mill

A rotating cylinder loaded with balls of iron or other material used to fine-grind ore in a concentrator prior to flotation. See also rod mill and autogenous grinding.

Bandwidth

The measure of a futures market's ability to process deals executed over an electronic platform.

Banking

See hot idling.

Bar

A long product in a non-ferrous or ferrous metal of rectangular, or sometimes circular, cross-section, normally over 10mm thick and up to 300mm wide. The term is usually reserved for products other than reinforcing bars (or rebars) or de-formed bars (or debars) which are produced specifically for use with concrete.

Bar-in-coil

For convenience, light steel bars (up to 10 mm or a little heavier) whether round, square or hexagonal, are typically transported in coiled form, rather than in straight lengths.

Base metals

Major industrial non-ferrous metals other than precious metals and minor metals. See also Noble metals.

Basic lining

In steelmaking the type of refractory furnace lining influences the type of steel produced. Basic refractory is magnesite or dolomite, the opposite of acid lining.

Basic oxygen furnace (BOF)

Equipment (with a basic, that is, non-acid lining) developed from the principles of the historical Bessemer converter for turning run-of-furnace iron into steel with a controlled content of carbon. In the BOF oxygen is injected into the molten metal rather than the air used in the nineteenth-century process. The process involves a chemical reaction: oxygen combines with carbon present in the iron (whether free or chemically bound). This produces a great deal of heat and the reaction temperature is controlled by adding cold ferrous scrap to the charge.

Basis

(i) Jargon term for the difference between a futures price and the price of the underlying asset. Also used for the difference between any pair of financial indicators. (ii) The location at which a price is effective (e.g. a town, a port, a factory gate). (iii) Mostly in zinc concentrates contracts, a metal price to which the Treatment Charge is understood to be linked. If LME prices move too far from the basis, a scale of variation is applied to the Treatment Charge. See also escalator. (iv) In some ores and ferro-alloys the nominal content of the valuable metal. Variations from this nominal level in actual delivery are reflected in the price on an agreed scale.

Basis point

A measure of tiny movements in futures and other volatile prices and yields equal to 0.01% of the going price.

Basis price

(i) The price agreed between the seller and the buyer of an option at which the option can be exercised. This price is also called the strike price. (ii) See also under Basis the pricing system in some ores and ferro-alloys called basis and scale

Basis risk

The risk that the correlation between the price of an underlying asset and a relevant derivatives market will degenerate, creating the potential for excess gains or losses in a hedging strategy.

Bauxite

Aluminium trihydrate, the most common raw material for the production of alumina. Roughly two tons of bauxite make one ton of alumina.

BBTS

Consortium of seven Indonesian tin smelters.

Beam

(i) The width of a vessel; may govern which harbours or canals it can enter. (ii) A steel or sometimes aluminium structura section. May also be referred to as a joist or as a girder. There are two main cross-section shapes, an 'I' and an 'H' turned through 90 degrees - the first with a bottom flange narrow in comparison to the web (which determines the load bearing capacity) forming a stable 'foot' and a narrow top flange forming a stable bearing surface for the load; the second, a 'wide-flanged beam' or 'H-beam' with flanges wide in comparison with the web. There are also beams with asymmetrical cross-sections, usually with a wider flange for the foot than the bearing head.

Bear

One who believes prices will move lower.

Bear covering

The closing of a short position.

Bear market

A market in which prices are declining.

Bear position

One where the trader has sold metal for forward delivery (ie, going short) with the view to buying back at a lower price, his profit being the difference between the sale and repurchase price.

Bear spread

An option spread of either puts or calls whereby the holder of the position benefits when prices fall.

Benchmark

A pricing mechanism used predominantly in ores and alloys markets. Many markets hitherto using benchmarks now use quarterly contract negotiations. A benchmark price is agreed by a major organisation or group of organisations on the supply and consumption side. This price is then used by market participants in the rest of the relevant industry as a reference for their own pricing negotiations. There may be local premiums or discounts applied to the benchmark to reflect quality or freight differentials. Benchmark prices were usually agreed on an annual basis, but sometimes are negotiated on a quarterly basis now.

Beryllium copper

Copper with a small addition of beryllium used for springs and non-sparking tools.

Bessemer steel

In the nineteenth century, Henry Bessemer and (independently) William Kelly devised a way of removing unwanted elements present in blast furnace iron by blowing air through the molten iron. Carbon, silicon, manganese or other targeted elements combined with the oxygen in the air and were expelled as gas or floated on the metal bath as solid combustion products. In modern steelworks pure oxygen (usually produced from an on-site air condenser) is used in a basic oxygen furnace.

Best orders

Orders to buy or sell which the LME Ring-dealing broker executes on the market at what the dealer judges to be the best available price. It is also termed buying (or selling) 'at best'. Becoming less common.

Beta

A measurement useful in option pricing of the difference in volatility between an individual commodity and the market in general.

(i) In steel, a long semi-manufactured product, usually of square cross-section with rounded edges, typically with 150mm or up to 6-inch sides (but sometimes round or hexagonal). A billet is rolled into a finished long product such as rebar, flat or angle (round billets are used by tube mills). Billets of square specification form the basis of a futures contract on the London Metal Exchange (LME). (ii) In non-ferrous (mostly aluminium and brass) a cylindrical shape for use in an extrusion press; or in a piercing machine as the start of solid-drawn tube production.

Bi-metal

The result of the fusion - usually under pressure and heat - of strips of two different metals or alloys. The resulting strip bends in response to temperature change; the heart of a thermostat.

Binary alloy

An alloy of two metals.

BIR

Bureau of International Recycling. International scrap metal trade association.

B/L

Abbreviation of Bill of Lading.

Black copper

A very impure (85-90%) first smelting of copper prior to fire refining.

Steel coil cold-rolled to very thin gauge (sometimes referred to as 'double reduced') used as the base (or substrate) for tinplate and other tin mill products. Some forms of black plate are sometimes referred to as 'loam plate'.

Black-Scholes

A formula (named after its two inventors) which relates the premium value of an option to a combination of the value of the underlying metal, the time to expiry, the volatility of the metal's price and the prevailing interest rate.

Black tin

Mining term for cassiterite (tin ore).

Blank

A piece of flat steel stamped (cut to a pattern) from coil to be passed to a press for shaping. In the past carmakers or their subsidiaries stamped and cut blanks for car bodies but increasing specialisation and closer links with suppliers has led to steel rolling mills delivering blanks already cut to customer's patterns, sometimes already lubricated for immediate use in presses, within a just in time supply contract. Also see tailored blank.

Blast furnace

A traditional iron-making furnace in the form of a tall column; a mixture of iron ore (which consists predominantly of oxides of iron), coke and small quantities of other materials is added continuously from the top of the column. Air is blown in ('blasted') from below, resulting in a fierce high-temperature reaction. In the first reaction, coke combines with oxygen in the blast to form carbon monoxide gas. This gas releases iron from the ore by seizing oxygen ions. Unwanted elements in the ore, such as sulphur, are removed by combining with other additions in the charge. Iron from the blast furnace may be refined for direct use in foundries or (casthouses) but most is usually converted to steel in a basic oxygen furnace (converter). Blast furnaces can operate for several years without the need to stop for maintenance.

Blast furnace gas

This off-gas (sometimes called "top gas") includes some carbon monoxide because of incomplete oxidation. In modern steelworks the gas is usually trapped and used, either for pre-heating processes or to generate electricity.

Blende

An old-fashioned word for ore, usually used with zinc or lead.

Blister copper

Crude copper assaying 96-99% Copper prior to final fire refining.

Block trade

A large transaction in one metal on one futures market. A pre-arranged large trade of one contract to be executed, usually during a designated trading time period. Block trading allows participants to complete large trades with sophisticated clients with certainty of price and execution.

Bloom

A pre-arranged large trade of one contract to be executed, usually during a designated trading time period. Block trading allows participants to complete large trades with sophisticated clients with certainty of price and execution. Generally considered an antiquated method of casting crude steel.

Body-in-white

The completed steel 'shell' or 'skeleton' structure of a car prior to the addition opening body parts, such as doors, and before painting.

As an alloying element, very small additions of boron improve the strength of steel (after further heat treatment) without making the steel hard to work. This is a cheaper way to add strength than using alternatives - commonly manganese, chrome or molybdenum. Boron improves abrasion resistance (so boron steels are used for shovels, ploughshares and tank tracks, and car designers make use of the extra strength of boron steel in stressed parts of car bodies. Even with very low boron content, steel may be classed as a special or low-alloy steel and some exporters have made use of this distinction to avoid quota limits on steel imports or other limits to trade, since the addition of boron does not add much to production costs and steel micro-alloyed with boron can be used by customers in exactly the same way as ordinary steel.

Borrowing

Term mostly used on the LME. Derived from 'borrowing metal from the market', which is achieved by buying a nearby date and simultaneously selling a date further forward. A carry trade whereby a market participant buys a prompt in the near-term and simultaneously sells a prompt in the longer-term. See also Cash and Carry and Lending.

Brand

A mark or name identifying the smelter, refiner, semifabricator or steelworks who has produced the metal. In primary metals often associated with a declared full chemical analysis. The deliverability of metals on the LME is mostly controlled by brand.

Brass

A family of copper-zinc alloys, classically 60/40. Variations in composition give different colours and physical characteristics.

Brazing brass

An alloy of 50% copper, 50% zinc used for joining iron and steel at a lower temperature than welding.

BRIC

Acronym for Brazil, Russia, India and China.

Break-even

(i) For a trader, a transaction that produces neither profit nor loss. (ii) For a producer a level of price which clears his operating costs. (iii) For a semifabricator or ingot maker, a difference between his raw material cost and product selling price that exactly covers his operating costs.

Breakout

A term used to describe the failure of the refractory lining (the heat-containing lining) of a blast furnace. If the failure happens below the level of the surface slag, molten iron can spill out, damaging nearby equipment and endangering the life of any worker in its path. Also loosely used to describe an unintentional, accidental flow of liquid iron or steel from other parts of the production process.

Bright drawn steel

After steel bars have been cleaned to remove process scale (by shot blasting or pickling) they may be finished by being drawn through a die to ensure close dimensional tolerances and improve their mechanical properties. The process gives the bars a bright or polished look.

Brinell

The standard test for hardness of metal. The higher the Brinell number, the harder the metal.

Briquette

(i) In ferro-alloys a briquette is a granular form of the alloy held together with a binder and contains an exact amount of the alloying metal. (ii) In scrap processing, particulate material (e.g. chopped cable, swarf) is briquetted under pressure to reduce surface area and increase density for charging to the furnace. (iii) Sometimes used to refer to a stabilised form of direct reduced iron (DRI) which can be conveniently transported - mainly used for steelmaking in electric arc furnaces (EAFs). Briquettes are colloquially known as bricks. See also pellets.

Broker

One who puts buyer and seller in touch with one another for a fee. In a broader sense the term is used for an organisation which is a member of an exchange and which acts as the means through which clients have access to the market. In these circumstances the broker acts as principal to his client but does not share in the risk as each deal is implemented by trading with other brokers in the market through clearing.

Brokerage

(i) Commission charged by a broker for completing a transaction on an exchange. (ii) Less commonly a similar fee for facilitating a physical transaction. See also Commission House.

Broker-dealer

A company with the capacity to trade for its own account and on behalf of its customers.

Bronze

An alloy of 90% copper 10% tin. Variants are aluminium bronze and manganese bronze; the latter is better known as High Tensile Brass.

BS

British Standard. Standards may cover purity, composition, physical properties, dimensions or all of the foregoing.

BSI

British Standards Institution. Issues British Standards.

Bulb flats

Hot rolled flat products with a rounded bulbous profile on one edge. This gives extra strength to the plate or sheet more efficiently than adding reinforcing bars. They are widely used in shipbuilding and in bridge construction, since the exposed rounded profile is a better recipient of paints or other protective coatings than a square edge.

Bulk ores

Ores shipped in very large volume without packing - mainly iron and managanese.

Bull

A market participant who believes prices will rise.

Bull market

A market in which prices are rising.

Bull position

One where the trader has bought metal with a view to selling it later after prices have risen to higher levels (i.e. going long), his profit being the difference between the purchase and sale prices.

Bull spread

An option spread of either puts or calls whereby the holder of the position benefits when prices rise.

Bullion

(i) Precious metals such as gold and silver, in unwrought form. (ii) Lead bullion is smelted, unrefined lead which still contains silver.

Burden

In steelmaking, the ore and associated fluxes or alloying ingredients added to the top of the blast furnace which is supported by the reduction material - coke.

Busbar

A rigid or flexible electrical connection for conveying heavy current to a furnace, aluminium smelting cell or electro refinery. Usually made of copper or aluminium.

Business day

Any day except holy or weekend days, a public/bank holiday or, on the LME, a day designated not to be by the LME directors. See also she and shinc.

Butterfly spread

An option strategy combining two option spreads whereby two options are bought (or sold) at the same strike price and one option is sold (or bought) at each of an equidistant higher and lower strike price, all for the same expiration. It is a limited-profit, limited-risk options strategy.

Buyers over

If a bidder remains unsatisfied at the end of any ring on the LME, or trading session on other futures markets, there are said to be buyers over. If this is so in cash or three months at the end of the second LME morning ring, the bid price will be the official buyer's price for that position.

Buyer's price

See seller's price and buyers over.

Buy in

To close or cover a short position.

Buying hedge

A hedge transaction involving the purchase of a futures contract to offset a short physical position and the risk of a rise in the metal price. See hedging.

By-product

A metal or other valuable element recovered in relatively small quantities from the production of another metal, e.g cadmium from zinc, platinum from nickel or molybdenum from copper.

Copper with a small addition of cadmium for greater strength. Standard metal for overhead conductor on electric railways.

Cakes

Usually refers to copper. Rectangular shapes suitable for rolling into plate, sheet etc.

Calendar spread

An option spread whereby a pair of calls or puts for the same strike price but different expiration is traded simultaneously, one bought and one sold.

Call option

An option granting the purchaser the right to buy. See option.

Calot

A calot (in zinc) or slug (in aluminium) is a thick disc of soft metal which is the raw material for an impact extrusion (e.g. collapsible (aluminium) tube for toothpaste).

Cancelled warrant

Cancelled warrants are important in that they represent the change in stockpiles of metal that may no longer be available at LME warehouses and is booked for removal or onward shipment. This information is an indicator of physical demand.

Cap

A derivative position that protects the holder from any cost of a rise in the price of the underlying above an agreed level. See also Floor.

Capacity creep

A steelworks will be established with a "name-plate" capacity or design capacity, which is an estimate of what can be produced annually in tonnes. Actual output in a year then depends on intensity of use, maintenance closures and any limiting factors or "bottlenecks" and so on. While capacity can be expanded by major development - such as clearing bottlenecks in the production chain or adding more equipment - there is also a tendency for incremental rises without investment, as workers add to their skills, maintenance procedures improve and management of production is improved, and with minor investments in plant and peripheries. This capacity creep can add up to 1% per annum.

Capacity utilisation

The percentage ratio of plant capacity actually used to that available. Typically high when the markets for a plant's products are good and low when they are poor.

Capesize

A large cargo vessel of typically 150,000 tonnes deadweight originally too large to go through the Suez Canal.

Carat

The measure of purity of gold. 24 carat is 100% Au.

Carbon steel

Ordinary unalloyed steel.

Carry

A futures transaction whereby a market particiipant buys or sells a nearby prompt while simultaneously executing the opposite transaction for a prompt in the longer term.

Carrying

(i) Carrying is the general term used for both borrowing and lending on the LME. (ii) It is also used to describe a borrowing operation which results in physical metal being held in an LME warehouse by the borrower. (iii) Beyond metals, carry trades are made in other financial instruments.

Carrying costs

The costs associated with a carry such as insurance, rent and opportunity cost.

Case hardening

Hardening the surface of steel without affecting the core metal.

Cash

(i) On the LME, the spot position for trading (with settlement on the second following day). (ii) On other futures markets, cash usually refers to physical. See also Cash settlement.

Cash settled

A derivative that is settled at expiry by balancing the cash difference between the value of the contract and the value of the underlying asset. Also known as contracts for differences.

Cash settlement

Some futures contracts can only be settled in cash and not by delivery of a warrant or lot.

Cash and carry

An arbitrage transaction involving the simultaneous purchase of a cash commodity and the sale of a relevant futures contract. Normally a trading strategy designed to take advantage of a Contango forward curve.When a contango exists, the premium of the forward position over the prompt generally reflects costs of storage, insurance and finance for that period. When metal is in surplus the contango may widen to the point where an effective interest at more than money market rates can be locked in. (See also Borrowing).

Cash today

See Tom-Next.

Cassiterite

The principal commercial ore of tin.

Casthouse

See Foundry.

Casting

(i) The product of a foundry. Molten metal is poured into a mould to produce the desired finished shape, often complex. Castings are mostly made of iron, steel, aluminium, copper alloys and zinc, but most metals can be cast. They may be sand-cast, gravity die cast, pressure die cast or, more rarely, cast by the lost wax process. The structure of cast metal is different from that of wrought metal. (ii) The process of casting steel in a continuous process.

Casting-rolling line

Advanced production line based on thin slab technology for the production of hot rolled coil from molten steel in one production step.

Catalyst

An element or compound which facilitates a chemical reaction without itself being consumed or altered. Classic examples are platinum in oil refining or Raney nickel in edible oils manufacture. Automotive catalysts are an important application of precious metals to reduce exhaust gas emissions.

Category member (LME)

Category 1 member - A member of the LME that is able to trade in the Ring, on LME Select and in the telephone market and issue LME client contracts.

Category 2 member - A member of the LME that is able to trade on LME Select and in the telephone market and issue LME client contracts.

Category 3 member - A member of the LME that is able to trade on LME Select and the telephone market but not to issue client contracts.

Category 4 member - A member of the LME that is able to issue LME contracts but is not a member of the clearing house, LCH.Clearnet.

Category 5 member - A member of the LME that has no trading rights except as clients. .

Cathode

i) A flat rectangular piece of metal which has been refined by electrolysis or electrowinning. Copper and nickel are commonly traded and delivered in this form. Copper is always traded as whole plates. Nickel may be whole plates or cut into squares of various sizes down to 1in.x1in. Cobalt cathode is traded as chips. ii) An electrical terminal with a negative charge.

Cathodic protection

Where two metals of different electro potential are in contact in moisture, the (sacrificial) one with higher potential corrodes faster and in so doing protects the other. Galvanizing works this way.

CCP

Central counterparty, i.e. a clearing house. See also Novation.

CCR

Continuous cast rod. See Properzi.

Cement copper

An impure form of copper recovered by acid precipitation from low grade ore or residues on to steel scrap. This is then smelted. See also heap leaching.

Cerium Mischmetal

See rare earths

Certificate of Origin

A consular document certifying the origin of a material. Important where some origins are embargoed or subject to anti-dumping duty.

CCP

Central counterparty. See Clearing house.

CFR

Short for cost and freight. Material sold cfr is delivered free to port of destination, but not insured. Sometimes expressed as c&f. See cif.

CFTC

Commodity Futures Trading Commission. US federal regulatory agency that safeguards the open and efficient operation of futures markets in the USA..

Charcoal iron

When moisture and volatile compounds in wood are driven off under pyrolysis (heating in the absence of oxygen), the charcoal that is left is almost wholly carbon. It was used historically in a reduction furnace to produce iron from ore. Coke produced from metallurgical coal (or coking coal) replaced it in blast furnaces for production on an industrial scale, but it still has some limited use, particularly in inland forested areas far distant from sources of coal and it can be used to produce limited quantities of special grades of iron.

Charge

The total material loaded into a furnace. In a blast furnace this consists of the burden plus coke (and other reducing media) or the ferrous scrap and other ferrous raw materials (pig iron, DRI) in an electric arc furnace (EAF).

Charge chrome

The largest-tonnage form of ferro-chrome with slightly lower chromium and carbon contents than high carbon (which has 60%Cr and 6-8%C).

Chartist

Market analyst who uses charts of price behaviour to predict price movements. Also called technical analysis. The opposite of a study of fundamentals such as production, consumption and macroeconomic data.

Chemical lead

High-purity lead suitable to resist corrosion in, for example, sulphuric acid. Confusingly called corroding lead in the USA.

Chopping

Cable chopping or granulation is a process of preparing scrap cable without burning. Wire and insulation in small pieces are then separated, usually by air tabling.

Chrome

The indispensable ingredient of stainless steel, which requires a chrome content of at least 10.5%. It is also used as a lustrous, hard-wearing and protective coating, electrolytically deposited on ordinary steel.

Cire perdu

See lost wax.

CIF

Cost insurance and freight. Material sold cif is free of all charges to the buyer up to the vessel being alongside at the port of importation.

CIS

Commonwealth of Independent States.

Clad metals

These are metals whose surface characteristics have been changed by bonding a thin sheet of another metal to one or both sides by rolling pressure or even explosion. See also Alclad and Sheffield plate. Not to be confused with surface treatment processes like galvanizing, anodising or electroplating.

Clearing

(i) Generally, the process of transferring futures and options contracts to a clearing house and holding them there. In full CCP clearing, the clearing house, through the process of novation, protects both participants to the trade from counterparty risk. This is usually done soon after a trade is executed and certainly every day. (ii) On the LME the daily process of settling all the differences between Ring member positions and settlement at the end of the day of trading. It is implemented through the clearing house and closes all the previous day's contracts.

Clearing broker/bank/firm

A brokerage or bank offering clearing and settlement services internally and to clients which execute transactions on a derivatives exchange by mediating between this counterparty and the clearing house. The clearing firm is responsible for handling the necessary paperwork and bears some counterparty risk so must satisfy certain criteria.

Clearing house

An independent body appointed or owned by an exchange to clear and guarantee business transacted between member brokers. The clearing house acts as a central counterparty for all transactions, bearing the majority of counterparty risk.The LME's clearing house is LCHClearnet.

Clearing platform

System that allows market participants to submit a transaction to the clearing house for processing.

Clerk

An assistant to an LME Ring dealer. He or she may be 'authorised (empowered to deal in the absence of the dealer) or 'unauthorised' (empowered only to record and check transactions).

(i) On the LME a price set by the Quotations Committee at the close of business for the purpose of assessing margin payments due. Not to be confused with settlement. (ii) On other futures exchanges the value prevailing at the end of the day's trading which becomes the official price for that exchange for that day.

Close out

See liquidate.

Cluster mill

See Sendzimir.

Coated steel

Ordinary (carbon) steel is often coated to protect it from corrosion; metals (aluminium, nickel or zinc) or organic materials (polymer paint or resin, plastic) or a combination of metal and organic materials are used.

CME Group

The world's largest futures markets operator, formed from the merger of the Chicago Mercantile Exchange (CME), Chicago Board of Trade (CBOT) and New York Mercantile Exchange (Nymex).

Cobble

A 'mis-roll' in a hot rolling mill. This can refer to a bar jamming in the guides or reaching the rolls off the true line, or becomes mis-aligned during rolling and, as a result being ejected off the normal receiving stands. Further rolling has to stop for re-setting of guides and rolls.

Cobbed ore

Ore which has been hand-sorted lump by lump.

Coil

Sheet metal is coiled up as it emerges from the rolling mill and is then normally strapped and sold in this form. In steel, hot rolled coil (HRC) is sold to independent cold rollers who sell CRC, or cold rolled in-house by vertically integrated mills. Vertical integration of hot and cold rolling is more normal in non-ferrous metals, as is continuous casting at the start of the process. Service centres are equipped to cut coil to sheet lengths and to slit wide coil to customer specifications. Some continuous rolling mills also produce coil of heavy gauge that can cut to length to replace discrete (or reversing mill) plate in some applications.

Coil mill

(i) A set of rolling stands (usually four or five) set in line, each successive stand reducing the gauge or thickness of the steel passing through; a hot rolling mill works on pre-heated slabs, a cold rolling mill further reduces the gauge of hot rolled coil without pre-heating it, producing cold rolled coil. (ii) The term is also loosely applied to a steelworks, or the section of a steelworks containing rolling lines.

Coinage bronze

An alloy classically of 95% copper, 4% tin and 1% zinc.

Coke oven

Before being used in a blast furnace the moisture, most volatile elements and most non-carbon components have to be extracted from metallurgical coal (or coking coal) by pyrolysis (heating in an oxygen-free atmosphere) in a coking oven (usually in one of an assembly or "battery" of ovens in a coking plant) to produce coke as near to pure carbon as is practical.

Coking plant

A plant for converting metallurgical grade coal to coke for use in blast furnaces.

Cold drawing, cold finishing

A final stage of processing a steel product including drawing wire down to size, bright drawing, peeling or grinding and polishing to final dimensions, to the point where it leaves the steelworks or finishing shop; that is, not including further machining and cutting by the steel industry customer making a steel fitting or mechanical product.

Cold rolled coil (CRC)

The flat product produced by cold rolling a hot rolled coil.

Cold rolling

The rolling treatment for hot rolled coil that reduces the thickness of coil to the exact final desired dimensions, which can be as fine as 0.35mm (0.014inch). Usually the unheated coil passes through up to five pairs of high- pressure rolls arranged in line. Cold rolling improves the surface finish and increases the strength of the coil, but creates internal tensions that cannot be resolved by crystal realignment because of the comparatively low temperature. If these tensions are not resolved, sheets cut from the coil would react unpredictably to subsequent forming treatments. The tensions can be reduced by including a tempering roll or tension leveller within the assembly of rolls, or resolved by annealing.

Comex

The New York Commodity Exchange, on which copper, aluminium, gold and silver are traded. Comex is often referred to as meaning the prices of these metals in New York, eg, "Comex is $3.50", meaning the Comex copper price is $3.50 per lb. Nymex - the New York Mercantile Exchange, which owned Comex when it was absorbed into CME Group - trades platinum futures.

Commercially flat

Suppliers of steel plate or sheet undertake to meet flatness criteria within stated tolerances. "Commercially flat" describes tolerances accepted in general trade. Mills or service centres offer even closer tolerances in return for extra payments.

Commission

The fee paid by a client to a broker for executing a futures transaction.

Commission house

A term referring to brokerage houses, usually American, which execute general commissionable business on behalf of clients in securities and futures.

Concentrates

The first-processed product from a mine. Processes such as flotation, magnetic separation or spirals raise the metal content from as-mined levels to as much as 60-80 times richer. Loosely referred to as ore.

Contango

The situation when the price of a metal for forward or future delivery is greater than the cash or spot price of the metal. Contangos occur when the metal is in plentiful supply. The size of the contango does not normally exceed the cost of financing, insuring and storing the metal over the future delivery period. See also Cash and Carry and Backwardation.

Continuous casting

A process of casting a product, such as a rolling slab or extrusion billet, through an open-ended die in which it is rapidly frozen. Strictly speaking this is semi-continuous casting. See also Hazelett and Properzi. Traditionally liquid steel was cast into large ingots, which were later re-heated to be rolled into slabs and then further rolled into plate or hot rolled coil. Some special grades of steel produced in small batches may still use this method, but in most cases now molten steel is poured through a rapidly cooled open-ended die to solidify on a casting table before being cut into slab. Continuous casting makes higher yields possible and achieves greater consistency in slabs.

Continuous hot rolled plate

Heavy gauge coil from a continuous hot rolling line can be used as a substitute for discrete plate in some applications. It may be referred to as continuous HR plate, 'strip mill plate' or 'universal plate'. It may be encountered in gauges of up to 15mm (0.6-inch) or, in plate cut from wide hot strip, mainly in thickness up to 15 (max. 20) mm.

Contract

(i) A legal document setting out the respective responsibilities of buyer and seller or client and broker in relation to a transaction or series of transactions. On many futures markets the standard trading unit is called a contract, but also lot or warrant. (ii) Exchange-traded futures are traded in standardised parcels know as contracts. Contracts usually determine lot size and other specifications in order to ensure standardisation.

Contract for difference

A contract stipulating the seller will pay to the buyer the difference between the current value of an asset and the contract value.

Contract month

On futures exchanges other than the LME a month in which the material is deliverable. There is not necessarily a delivery month every month. The nearest month is known as the spot month.

Converter

A furnace for refining steel, copper etc. by blowing air through the molten metal.

Convertor

Generic term for companies converting steel alloying ores into intermediates such as ferro-alloys, molybdenum oxide or ammonium paratungstate (APT). In steelmaking, the vessel in which iron from the blast furnace is refined by oxygen treatment.

Co-product

Usually two metals recovered from the same ore and near enough to each other in value that neither can be called a by-product of the other.

Corner

A position where one operator owns all or virtually all the market stocks of a commodity. His object is to control the supply of the metal, and thus cause an exceptional rise in price. The LME has rules to avert the worst effects of a corner. (See also Squeeze).

Corex

Proprietary name for an iron ore reduction process that can use non-coking coal, which reduces the raw materials cost and avoids the need for investing in coke ovens. It can also use ore in pellet form, rather than in the agglomerated form of sinter (see sintering).

Cor-Ten

A corrosion-resistant weathering steel.

Cost of finance

The cost of maintaining a physical cash position.

Counterparty

The buyer or seller on the other side of all transactions.

Counterparty risk

The risk that a counterparty to a trade will fail to fulfil its obligations.

Cover

The balancing of an open position by buying (if the original position was short) or selling (if the original position was long) on the market.

Covering a long

Selling futures contracts to liquidate an earlier purchase and close a long position

Covering a short

Purchasing futures contracts to cancel out an earlier sale and close a short position.

CR

Cold rolled. A process used to fine-tune the surface finish and dimensional tolerance of hot rolled steel. Also to change cross-sectional shape.

CRC

Cold rolled coil. See coil.

Credit

(i) The tolerance extended by a seller to the buyer for the time he takes to settle invoices. (ii) On the LME brokers extend credit to the client from which they then draw variation margin, thus avoiding frequent margin calls. (iii) The borrowing capacity of an individual or company.

Credit limit

The maximum amount of credit an LME broker will extend to a client to meet margin calls. See also credit.

Credit risk

The risk a debtor will default by failing to repay principal.

Creep

A metal which slowly deforms under pressure or tension is said to creep. Lead creeps at room temperature, mild steel creeps at elevated temperature.

Cross

(i) A cleared transaction where the buyer and seller are the same broker. On the LME the normal means of creating the futures contract to settle an in-the-money Tapo. (ii) On other markets the expression is sometimes used to cover a situation where bid and offer prices temporarily become inverted.

Crude steel

The first solid steel product upon solidification of liquid steel.The product of a BF-BOF process converter or EAF as liquid, or cast product (ingot, slab, billet, bloom or steel casting). It is regarded as the basic measure of steel output. Sometimes referred to as raw steel.

Crucible

Refractory pot in which smaller quantities of metals and alloys are melted prior to final adjustment of the composition and pouring. Traditionally used to make tool steel, now mostly used for preparing metal for casting in the foundry.

Crusher

As-mined rock is crushed to progressively smaller sizes on its way to milling and flotation. The first and most powerful crushers are jaw crushers, followed by the gyratory or roll type.

Cryogenics

The science of extreme cold. Used to process extreme oversize or plastic-covered scrap by embrittling it.

CTA

Commodity Trading Advisor - a firm or more likely an individual who uses charts and system trading to trade on futures markets on behalf of managed investment funds. See also Algorithm.

Cupellation

Separation of base metals from precious metals by oxidation of the former. The oxides are absorbed by a cupel (a dish of bone ash); the precious metal remains as a bead on the cupel. A technique used in assaying.

Cupola

A smaller melting furnace, typically used by a foundry to melt iron or scrap.

Custom smelter

In non-ferrous, a smelter which depends for its intake mostly on concentrate purchased from independent mines and on scrap metal, rather than its own captive mine sources. See also Toll.

An order placed with an LME broker which is valid throughout the rings and kerbs during the day on which it was placed. If not executed that day, it is automatically cancelled. If valid for all markets (i.e. premarket, lunchtime and evenings as well as the rings and kerbs), any instruction should clearly state "all markets". The order can then be executed at any time of the day by telephone or electronically.

Day trader

A trader, usually an independent individual, who buys and sells a futures contract on the same day for a small profit. Often encountered on US futures markets, where they are known as locals. See also Intraday.

Debar

Short for deformed bar. A rebar that has been deformed to grip better in concrete.

d/d

Abbreviation for delivered.

ddp

Delivered duty paid.

ddu

Delivered duty unpaid.

Declaration

The act of an option buyer informing an option grantor that he is taking up his right to buy (or sell) metal under the option contract.

Declaration date

The date on which the buyer's right to exercise his option expires if not declared. On the LME this is the first Wednesday in the month or, if a holiday, the next business day. There is no declaration date for a Tapo.

Deduction

In a concentrates purchase or toll-smelting contract, provision is made for a smelter to make a deduction for unavoidable metallurgical losses before accounting to the seller for the metal recovered.

Deep drawing steel

Steel sheet that is needed in a deeply deformed or elaborate shape in its end use, with uniform thickness, free of stress and weak points, as, for instance, for car body panels or deep-drawn cans for food and drink. It has to be very "clean" (or low in residual and "tramp" elements - see interstitial free steel), and has to be carefully annealed after cold rolling.

Deferred delivery

Delivery in the future. Concept that allows futures market places to develop. .

Delivered

A delivered price includes free delivery to the buyer's works or warehouse, including, unless otherwise specified, any import duty. See also ddp/ddu.

Delivery

Supply of material in accordance with the terms of a contract. On the LME this may be effected through supplying a warrant or on other futures markets a similar document of title. In the USA often referred to as shipment.

Delivery date or Prompt date

The date on which a metal has to be delivered to fulfil the contract terms.

Delta

A measure of the rate of change in an option premium against changes in the price of the underlying commodity. Often used as shorthand for price exposure in an option dealer's position.

Demurrage

Penalties payable to a shipowner for delays if loading or unloading does not proceed at the rate laid down in the contract. May arise from landside transport problems, port congestion or weather.

Dendritic

(i) Dendrites are whiskery growths on anodes which can short out the electrolytic process. (ii) Also used to characterise geological formations.

Deposit

See Initial Margin.

Depth

Market depth is the size of an order needed to move the market a given amount - if the market is deep, a large order is needed to change the price.

Derivatives

A financial instrument or agreement between two parties that has a value, based on the underlying asset. There are many kinds, but the most common are swaps, futures and options.

DGCX

Dubai Gold and Commodities Exchange.

Difference

In LME clearing, contracts are concluded at maturity by the payment into settlement by the broker, or from settlement to the broker, on behalf of his client, of the difference between his closed contract price and the corresponding settlement price.

Die casting

Casting a non-ferrous metal (usually zinc or aluminium) into a closed steel die either by gravity pouring (gravity die casting) or injection under pressure (pressure die casting). More accurate and faster than sand casting.

DIN

Deutsche Industrie Norm - German standards

Direct strip casting

Casting steel strip very close to final dimensions to minimise the need for subsequent hot rolling to size (from conventional slab).

Discrete plate

Plate produced to size, usually in a reversing mill. This is usually offered to higher performance specifications than plate cut from heavy gauge hot rolled coil.

Discretionary account

An account which gives the broker the right to initiate trades that he believes will meet the client's objectives. More common in equities than futures.

Distribution

Refers to the reach of electronic trading platforms. Select, the LME's electronic trading platform, has a defined distribution because it is only open to exchange members, for example.

DNSC

Defense National Stockpile Center. US Government agency responsible for selling metals and ores from US stockpile surpluses.

DNV

Det Norske Veritas, an independent international certifying body based in Norway.

Dolomite

A form of limestone containing magnesia, which is used as a flux in a blast furnace. Named after the mountain range in northern Italy that is composed of this stone.

DOM

Short for drawn over mandrel. Steel industry term for solid drawn tube.

Double option

An option - sometimes known as a straddle - which gives the buyer or taker of the option the right either to buy from or sell to the seller (or grantor) of the option at the basis price.

Downstream activities

General term for processing steps following initial steelmaking, especially re-rolling and coating, cutting to size and joining or fabricating, which add value to downstream products. The opposite of upstream activities.

Downstream products

Tradeable products in the production chain following steelmaking and casting; products that have undergone some transforming or processing steps.

Draught

The depth of water necessary for a vessel to float without fouling the bottom.

Drawback

The refund of customs import duty on the re-export of the goods or export of products made from them.

Drawing

The process of drawing metal through a die to accurately produce long lengths of wire, tube or strip sections.

Dredge

Alluvial deposits, notably of tin, are often mined by dredges which float on artificial or natural shallow waters (pond), dredge up the mineral and concentrate it on board with spirals, shaking tables etc. Dredging in front of the dredge and depositing tailings behind it moves the pond across the deposit.

DRI

Direct reduced iron or sponge iron is produced in a single chemical reaction, usually by applying a reductant rich in hydrogen obtained from natural gas (although some carbon monoxide may be included and there is also a DRI process that uses coal). The process is distinguished from what is chemically a two-stage process of producing iron in a blast furnace. DRI may consist of 90-97% iron, depending on the ore feed and the equipment used; it is mainly used by electric arc furnaces (EAF), sometimes blended with steel scrap to adjust overall steel composition. DRI units are commercially viable at much smaller scale than blast furnaces. They are usually located close to steelworks and sometimes charge their hot product directly into the EAF. DRI easily re-oxidises, so for convenient transport a passivated form, hot briquetted iron (HBI), has been developed.

Dross

Partly oxidised scum floating on the top of molten metal. After skimming off may be processed to recover its metal value.

Dry metric ton

In some contracts covering concentrates or bulk ores, the relevant tonnage is specified as dry - i.e. after deducting the moisture content.

Dual capacity

The ability of a market participant to act both as an agent and a principal. See broker-dealer.

Dual phase steels

Carbon or stainless steel combining the character of two allotropic forms of steel, so that they are ductile enough for deep drawing but after forming have superior strength.

Ductile iron

See SG iron.

Dumping

A trade term to describe the systematic export of steel or any other product at prices below production costs or below those prevailing in the home market. In the most reprehensible cases, producers enjoy some form of protection in their domestic market that secures profits can afford to export at prices covering only marginal costs. The free trade rules of the World Trade Organisation allow governments to protect domestic producers from imports that can be proved to be offered at dumped prices by imposing anti-dumping levies.

Duplex stainless steel

A fast-growing class of stainless steels. So-called because it is a combination of austenitic and ferritic types, with intermediate nickel content. Good for high strength applications.

Electric arc furnace. Mostly used for melting steel scrap or iron. See also Electric resistance furnace.

EFF

Exchange for futures. A transaction whereby an off-exchange contract is exchanged for an on-exchange one.

EFP

Exchange for physical. A term originating on American futures exchanges, but now increasingly in common use on the LME, whereby two physical counterparties swap a physical parcel and a futures position at mutually agreed prices to avoid each of them having to hedge the transaction separately.

EG

Electrolytic galvanized steel.

Electric resistance furnace

Electric furnace for smelting ferro-alloys where heating is achieved through resistance to the passage of the current from carbon electrodes through the charge, as well as from arcing. May be slowly rotated. See also EAF.

Electrical steel

The general term for cold rolled sheet steel used in lamination form for the magnetic cores of transformers and electric motors. In these applications, it is desirable to have high magnetic permeability and low energy loss or dissipation. Three main forms are in general use - a common steel, heat-treated and lacquered, which is the least efficient - and two forms of steel alloyed with up to 6% silicon (either a simple or non-grain orientated (NGO) form which has uniform properties, or a grain orientated (GO) form which provides magnetic properties in the rolled direction). GO silicon steel offers the highest permeability and the lowest energy loss. A form of amorphous steel has also been used, but it has until now been difficult to work because of its brittle, glass-like nature.

Electrode

An electrical terminal. In the steel industry, large carbon electrodes are used in an electric arc furnace to melt ferrous scrap and other iron-bearing materials, making use of the heating effect of high-density electric currents.

Electrolysis

(i) A process by which direct current passes from one electrode (the anode) through a liquid electrolyte to another electrode (the cathode) in a cell. The passage of ions from the anode causes the pure metal only to be electrodeposited on the cathode. Because of the purity of the deposited metal, electrolysis is often used in refining. Impurities fall to the bottom of the cell as a slime and may contain valuable by-products, such as precious metals. (ii) Also used for electroplating corrosion-resistant metals such as silver, nickel and chromium on tarnishable metals such as steel or brass. See also electrowinning.

Electrolyte

A liquid that can conduct electricity; electrolytes are used for electroplating or deposition by electrolysis.

Electrolytic galvanized steel

Steel coated (electroplated) with a layer of zinc electrolytically (by electroplating). (Product abbreviated to EZ or EG.) Zinc protects the steel from oxidation (corrosion/rusting); as a result of chemical changes after being deposited on the steel surface, the zinc develops a tough impermeable film.

Electronic trading

Mostly refers to trading on a futures market on an electronic platform such as the LME's Select or a proprietary system. Also some physical trading is done electronically.

Electroplating

A process by which a metal is deposited from an anode or from metallic salts in an electrolyte bath to a metal substrate forming the cathode of the circuit. The process is used to deposit a protective layer of zinc on steel to produce electrolytic galvanized steel. Electroplating allows precise control of the thickness and distribution of the coating, which depends either on the intensity of the electric current or the time during which it flows. Also used for tinplate.

Electrowinning

An electrolytic refining process in which the metal is recovered from the electrolyte rather than from an anode. See electrolysis and SX/EW.

Eluvial

A geological term referring to a deposit created by the action of water, but without movement from its original position (e.g. the bed of an ancient lake). See Alluvial deposit.

EMEA

Acronym for Europe, Middle East and Africa.

EN

Series of European standards.

End consumer or End user

A company in whose hands the identity of the fabricated metal is finally lost in a more complex product, e.g. a ship, refrigerator, motor car or transformer. Some of these companies also have fabricating subsidiaries. See also Fabricator.

Steel tube formed from skelp and longitudinally electric resistance welded. See also welded tube.

Escalator

See Basis. Sometimes a concentrates contract provides only for LME prices to rise above the basis price, in which case the scale is known as an escalator.

EFP

Exchange for physicals. A deal in which a physical position is traded for a futures position.

ESR

Electro slag refined. Refers to a process for making highly refined steel by using an ingot as a consumable electrode in an EAF where the arc is submerged in the slag and the pool of molten steel forms below its surface.

ETD

Exchange-traded-derivative. A derivative traded on an exchange and subject to the regulations and trading practices of said exchange.

ETF

Short for exchange traded fund, ie, a fund whose shares are traded on an exchange like ordinary shares. ETFs may invest in a wide variety of securities and derivatives, including those related to commodities. An ETF holds assets and trades at approximately the same price as the net asset value of its underlying assets.

European Association of Metals. Umbrella organisation for non-ferrous metal industry in Europe.

European option

An option which in practice is only declared on the expiration date because the underlying metal can only be acquired at that time. The LME option contract, which in theory can be declared at any time prior to expiration, is effectively a European option because there is no economic benefit to early declaration.

Eutectic

An alloy of two (occasionally more) metals that melts at the lowest temperature of any combination of those metals.

Exchange contract

A contract registered and cleared on a futures exchange.

Execution

Finalising a transaction.

Exercise

The implementation of an option following declaration.

Exotic metals

An imprecise term generally covering very small volume minor metals with very special characteristics, some degree of rarity and often a discontinuous market.

Expiration date

The date at which the buyers rights under an option contract expire unless declared. See Declaration Date.

Expiry

The date on which a futures contract becomes due (see Prompt).

Ex-ship

Seller's responsibility ends when the goods leave the slings alongside the vessel. Buyer must provide barge or vehicle in which to receive them.

Ex-stock

Available from manufacturer or trader stock, ie, immediately available.

Extras

Additions to basis or list prices due on steel products of particular dimensions; or guaranteed to especially fine tolerances with respect to dimensions or flatness; or steels that have received particular treatments or coatings. Extras reflect the extra cost involved in carrying out extra work (for example thin gauge steel often has to be processed for longer than thicker, heavy gauge steel) or treatments or the cost of achieving close tolerances. They also reflect yield losses in supplying to sub-optimal dimensions. A production line will be designed to work most efficiently when turning out steel within a range of dimensions and will need to charge more to supply steel products outside this range.

Extrusion

A process of heating a billet of metal to a plastic state and forcing it through a die. This enables the quick and economical production of long lengths of complicated sections. Lead was the first metal to be extruded, but today aluminium, brass, magnesium and even stainless steel are extruded.

exw

See ex-warehouse.

Ex-warehouse

Goods sold ex-warehouse are usually placed on the truck, wagon or barge of the buyer. See also In-warehouse.

EZ

Electro zinc. Refers to galvanized sheet or coil where the zinc has been deposited electrolytically, not hot-dipped.

A company which transforms refined metal (and sometimes scrap as well) into semi-fabricated products (e.g. wire, cable, tubes, strip, rods) for sale to an end-consumer. More correctly referred to as a semi-fabricator.

Fair value

(i) A loose term referring to the level at which the commentator believes the market should be trading. (ii) In setting import duties, a comparison with the cost price of the goods in the country of origin or the level at which they are sold in other markets.

fas

Stands for free alongside. Material is delivered to the quay or lighter alongside buyer's vessel, but does not cover the cost of slinging it on board.

Fatigue

A form of failure of metals after being subject to vibration, repetitive strain or temperature cycles.

FCM

Futures Commission Merchant. US expression. Has same meaning as Commission House.

Fee

Sum of money paid for each transaction, either to an exchange or to a broker.

Ferritic

A class of stainless steels with no nickel content, so lower-cost. Good for high-temperature applications (e.g. motor car exhausts), but less good for aggressively corrosive conditions. See also austenitic and duplex.

Ferro-alloy

An alloy of iron with another metal used either as an ingredient for the finished steel or as a consumable addition to the furnace burden, or as both. Ferro-silicon reduces the carbon in combination with iron (iron carbides) but may be used to add small percentages of silicon to special steels, notably steel for electric motor and transformer cores (high levels of silicon content are undesirable). Manganese has a greater affinity for sulphur than iron does, so ferro-manganese can be used to extract sulphur from molten steel, forming an easily extracted slag, but ferro-manganese is also used to add manganese to steel as an alloying metal to enhance performance.. See also Master alloy.

Ferrous

Materials mainly containing the element iron, i.e. iron and steel.

FIA

Futures Industry Association (USA).

Fines

Ore or ferro-alloy which is in too small a particle size to make a good charge to the furnace and is therefore pelletised or briquetted.

The refining of crude metal by pyrometallurgy, e.g. in a reverberatory furnace or converter.

Flake

A small flat particle of metal. Cobalt and electrolytic managanese cathode metal, after separation from the mother sheet, are in flake form. Also the raw material for aluminium paint, produced by ball-milling aluminium foil scrap.

Flange

(i) In steel structural sections, flanges are set at right angles to the 'web', the vertical member that provides the load-bearing capability of a steel beam or girder. The flanges form a stable base and a stable platform for carrying loads. (ii) The name given to joint sections of tubes and pipes. These sections consist of a ring with a ridge set, like the flange of a beam, at right- angles to the ring's surface.

Flash

The metal which exudes at the joint line of a casting mould or die or closed die for forging. Usually removed at source and recycled.

Flask

A steel container to hold 34.5 kg of mercury, the standard unit. Colloquially called a bottle.

Flash furnace

A smelting furnace in which the concentrate and fuel are blown into a closed chamber in finely-divided form. A much faster reduction than in a reverberatory furnace.

Flat products

Expression mostly used in steel, covering plate, coil and sheet.

Flex option

A non-standard option in which the buyer and seller can negotiate the exercise price and the expiry date.

Floor

(i) That part of a futures exchange where open outcry trading takes place. See also Ring and Pit. (ii) A derivative position that protects the holder from any cost of a fall in price of the underlying below an agreed level. See also Cap.

Flotation

The process used at a mine to separate fine particles of valuable metal from gangue. Finely-ground ore is slurried and passed through cells where agitators and chemicals cause the metal to rise to the surface, where it is recovered from the overflow, dried and sent to the smelter. Gangue in the underflow is sent to tailings ponds to settle out, sometimes for stowing back underground. See also concentration.

Flow moisture point

A measure of a danger point at which combined moisture in a cargo, typically concentrates, becomes free moisture under the effect of vibration or movement. See also thixotropic.

Flux skimmings

A type of zinc scrap arising from skimming oxidised metal from the surface of a hot dip galvanizing bath. With some 50% Zn content, it is recycled.

Fluxes

As the name implies, fluxes improve the flow of reactions when added to the burden or charge of a furnace; fluxes aid the removal of undesirable elements or reaction products in the furnace charge. Some fluxes may do no more than prevent coagulations impeding chemical reactions or blocking the flow of molten metal. Other fluxes combine with impurities to form compounds as furnace slags that can be skimmed from the molten metal or otherwise mechanically removed. Mineral fluxes, such as limestone of various forms, are used to combine with or otherwise bind elements such as phosphorus or sulphur, and gangue in the ore burden. Some ferro-alloys act mainly as fluxes, while adding some iron units to the burden. Others can serve a dual purpose - a proportion of the manganese in ferro-manganese added to the burden removes sulphur by forming a slag compound with it, but some may remain as an alloying metal in pig iron and eventually in finished steel.

Flying shear

An oscillating cut-to-length shear that cuts sheet from coil while the band is moving.

FOA

Futures and Options Association (European association based in the UK).

fob

Free on board. Seller bears all costs up to the material being placed on board buyer's vessel.

Foil

The thinnest form of rolled metal, less than 0.15 mm thick, most commonly aluminium, but also other metals and steel. Thicker aluminium, e.g. for pie dishes, is also known as foil. See also shim.

Force majeure

The clause in an ore, metal, alloy or scrap supply contract which allows the seller not to deliver or the buyer not to take delivery of the contracted material because of events beyond his control. There is no force majeure clause in an LME contract. Customers affected by a declaration of force majeure on an LME-deliverable metal by a producer or refiner can always turn to the LME as a source of metal, and suppliers can deliver their metal to the LME if their customers declare force majeure.

Forging

Shaping steel and some non-ferrous metals while hot by repeated hammer blows. Forces of up to several tons may be used. Often results in the strongest form of the metal in the alloy used.

Forward

The purchase or sale of metal for delivery at a specified future date. Hence Forward Price, Forward Contract. As distinct from futures, a forward contract is not tradable.

Forward curve

Representation of the future value the market has attributed to the underlying asset at a particular moment in time through active trading.

fot

Free on truck or train. Material at seller's plant or in warehouse is placed on buyer's truck or train wagon at seller's expense.

Foundry

(i) Place where castings are made. (ii) The last department in a smelter where the metal is cast into standard shapes (semis in steel). In copper (casting anodes) and aluminium (casting slab and billets) the department is usually known as the Casthouse

Fragmentiser

See shredder.

Franco

French for delivered.

Free machining

Metal such as steel or brass which has been alloyed with small amounts of lead, bismuth or other soft metal to optimise machinability. Free machining brass is a notably easy material to machine. See also leaded.

Front end

The execution side of a broker's trading software.

FSA

Financial Services Authority. UK regulatory body.

Full hard

Cold rolled steel (or other metal) that has not been annealed.

Fundamentals

Physical production, consumption and macro-economic data are studied to establish market fundamentals. Also see chartist.

Fusible alloy

Very low melting point alloy, e.g. for sprinkler systems.

Futures

Generic term for exchange-traded contracts creating an irrevocable obligation to buy or sell an underlying asset at a defined price and date in the future.

A proprietary corrosion-resistant rolled steel coated with an alloy of 55% aluminium 45% zinc for advantages of both galvanizing and aluminising.

Galvanizing

The process of protecting steel against corrosion by coating it with zinc. Sheet is usually continuously galvanized in coil, either by immersing in molten zinc (hot dipping) or electrodeposition. After galvanizing it may be corrugated and cut to length. Other products such as tube, angle and post-fabrication structures such as roof trusses and gates are hot-dipped. See also metal spraying.

Galvanneal

A form of hot-dip galvanizing carried out continuously whereby the coil to be coated is passed in the usual way through a bath of molten zinc, subjected to control of the coating thickness after it emerges (evened out and controlled by passing) and then drawn through an annealing oven. Annealing after galvanizing like this creates a more complex zinc-iron alloy interface which improves protection from corrosion. .

Gamma

A measure of the rate of change of an option's delta in response to changes in the price of the underlying.

Gangue

The worthless part of as-mined ore.

Gauge

The thickness of a sheet or coil of steel.

Gearing

The power of an instrument to control a much more expensive asset for low or no cost. Futures contracts are geared because only a small margin is paid to open and trade a position in the futures market. This is also referred to as leverage.

German silver

See nickel silver.

Give-ups

A give-up occurs when a client instructs an executing LME broker to give up an uncleared contract to another of his LME brokers for the purpose of being entered into the clearing and eventually settled. See also Transfer.

gob

Good ordinary brand. A grade of zinc of 98% minimum purity.

Good Till Cancelled Order (GTC)

An order on the LME to buy or sell which is valid every market day during rings and kerbs (or during the entire day if specified), until cancelled by execution or client's instructions.

GOS

Russian standard specifications.

Grade A

Designation of a good quality of tin in international commerce. The standard material in the New York OTC tin market. See also Straits tin.

Grain (of metal)

Metalworking, e.g. rolling, imparts a grain along the direction of rolling; forgings are stronger because the grain of the metal follows the shape of the forging.

Grain oriented

In steel, sheet for electrical laminations for transformers is sold as grain oriented. See Grain and electrical steel.

Grantor (of an option)

The person or firm that sells an option.

GTC

Good Till Cancelled.

Gunmetal

A strong alloy of 85% copper, 5% tin, 5% lead and 5% zinc, or near variant of this mix.

Expression covering the reduction in valuation of an asset (eg, a warrant) offered in lieu of cash to cover a variation margin call.

Hammer mill

see Shredder.

Hard zinc

A form of scrap zinc that accumulates at the bottom of a galvanizing bath.

Hardness

There are several scales providing a standardised basis for measuring the resistance of a steel to indentation (which has implications for the strength of the steel), among them Vickers, Brinell and Rockwell.

Hazelett process

A method of continuously casting and rolling pure aluminium to produce sheet. See also Hunter Douglas and Direct chill rolling mill.

A process for recovering metal, most commonly copper, from oxide or low grade ore or residues. Material is heaped up on an impermeable surface and sprayed with acid which picks up metal and is collected and sent for refining. The process may be bacterially assisted. See also Cement copper and SX/EW.

Heat treatment

Process for increasing the mechanical properties (strength, hardness) of steel and some non-ferrous metals. See also annealing.

Heavy media

A slurry in which some ores or scrap metal of differing densities can be sorted by flotation.

Hedge

To offset a position in one market with an equal and opposite position in another market .

Hedge buying

Placing immediate purchase orders or forward orders to avoid an expected price increase. A physical form of hedging.

Hedge fund

An organisation trading in volatile markets which will go either long or short according to its view of the market. Does not necessarily engage in hedging.

Hedging

The establishment of an opposite position on a futures market or by means of options from that held and priced in the physical commodity. Without hedging, the physical position would be at risk of price fluctuations. Precautionary buying or selling (whether physically or in a futures market) or ordering to reduce or eliminate future price risk.

Herreshoff

A bottom-fired multiple-hearth reverberatory furnace used to convert molybdenum sulphide to oxide. Material is fed in at the top and moved by rabbles and gravity to successively hotter hearths.

A direct reduction (see DRI) process for iron-making, based on the use of iron ore fines and non-coking coal for the production of hot metal. The name reflects the fact that it was developed by Hamersley Iron, the Australian iron ore mining subsidiary of Rio Tinto.

Historic price carry

See NMPT.

HMS

Heavy Melting Steel. Premium grade of steel scrap. A classification for clean "obsolete" scrap (that is scrap from products that have reached the end of their working lives, such as scrapped ships or motor cars). HMS1 is defined as having minimum thickness of 1/4-inch (6mm) and very often much thicker, with a maximum size, typically up to 60 inches x 24 inches (1.525m x 0.61m). HMS2 includes thinner gauge scrap, down to 1/8 inch (3mm) thick.

Holder

The purchaser of an option.

Hot band

A term for hot rolled coil (HRC) widely used in the USA.

Hot idling

The refractory lining in a blast furnace is at risk if the furnace is allowed to cool, so when maintenance is scheduled, at intervals of up to 14-15 years, a careful and expensive procedure is followed. If the steel company simply wants to reduce output because of reduced demand the furnace is kept on stand-by, charged with coke, without an ore burden, and air supply is reduced to slow the combustion rate while keeping refractories at a safe temperature. Hot idling is sometime referred to as "banking" the furnace.

Hot metal

The liquid metal emerging from a blast furnace (BF) or electric arc furnace, that is newly produced iron or steel.

Hot rolling

On a hot rolling line pre-heated steel (often in the form of slab, billet or bloom) are squeezed between heavy rolls. The rolling equipment can consist of rolls in a single unit, through which steel work pieces are passed and re-passed with the rolling gaps continually reduced (a reversing mill), or comprise a hot rolling line with a succession of roll stands, each set with a narrower gap than the preceding stand to reduce the gauge progressively. Rolling steel at high temperatures makes it possible to achieve large reductions in thickness; at high temperatures the crystal structure of steel is relatively easily re-arranged and re-aligned, and the stresses induced by rolling slabs to thinner dimensions are self-resolving. .

House account

A proprietary trade by a futures broker (ie, on its own account).

HR

Hot rolled. See also HRC, coil.

HRC

Hot rolled coil. The first product from slab - the product of hot rolling.

HSLA

High strength low alloy. Refers to steels used in pipelines, engineering and construction of higher strength and corrosion resistance than carbon steel. Their properties are obtained by small additions of alloying elements such as manganese, molybdenum and vanadium.

Hunter Douglas process

A process comparable to Hazelett. It handles stronger aluminium alloy but is limited to narrow strip.

Hydro-forming

A recently developed method using pressurised fluid to form metal sheet in a closed die. Extremely complex shapes can be formed with great accuracy without creating stress concentrations or weak points.

Former name of the Latin American steel industry association, now known as Alacero.

Inclusions

A general term for unwanted elements or (more often) compounds in steel which detract from its performance, whether from a chemical or mechanical standpoint. Oxides and sulphides are particularly troublesome.

Inco terms

A suite of legally-precise terms covering the international shipment of material, eg, fob, cif.

Indent

Old term for an order to a shipper or agent to buy and ship a material. A 'specific' indent will call for particular brands, qualities or sizes. An 'open' indent gives the shipper latitude on these aspects.

Induction furnace

This form of furnace consists of a vessel surrounded by an electromagnetic coil which heats up the steel charge by generating eddy currents in it. It is an effective process for producing very clean steel (that is steel with minimum inclusions). It is relatively efficient in energy use and produces very low levels of noxious emissions.

Ingot

Form of cast refined metal used for convenience of shipment and handling. The form approved for delivery in LME aluminium, aluminium alloy, lead, tin and zinc contracts. Also see ingot maker.

Ingot maker

Firm producing specification alloy ingots, mainly aluminium or copper, from scrap for sale to foundries. See also Molten metal.

Initial margin

The initial outlay of money required to open a futures position. The size of this deposit varies from metal to metal, but is usually a fixed amount, set by the Clearing House, representing a small percentage (5% or 10%) of the value of the contract. See also Variation Margin.

Integrated producer

(i) In steel, a company which may or may not be an iron ore mine owner, but is a producer of both iron and steel, usually down to a finished product like rails or sheet. (ii) In non-ferrous, a producer of metal who owns mines, smelters and refineries, and sometimes also fabricating plants.

Interdealer Broker (IDB)

A specialist broker that operates as an intermediary between market participants that wish to buy or sell without revealing their identities to other market participants. Also referred to as intermediaries.

Inter-Market

Dealings in a metal between LME brokers, over the telephone or on screen, which take place before the morning session, in the period between the close of the morning kerb and the first afternoon Ring, or after the afternoon kerb.

Interstitial-free steel

This is also sometimes known as "ultra clean steel". When steel crystallises (solidifies or freezes) unwanted or "tramp" elements (or in some cases, compounds) may be lodged in gaps in the iron matrix, that is, between the crystals; carbon and nitrogen are commonly found in these interstices. The size and shape of interstices depend on the manner in which the metal has crystallised. A number of refining techniques have been developed to reduce or eliminate these tramp elements as, if uncontrolled, they can lead to excessive brittleness or provide starting points for weaknesses and local failure when the steel is under strain. .

Inter-Office

Deals concluded between LME members as official LME business at any time outside Ring trading hours

In-the-money

An option whose strike price is above the current market price if a put or below it if a call.

Intra-day

A trade or pricing relating to a futures market price ruling during the day, ie, without waiting for the close. See also local.

Intrinsic value

The value of an in-the-money option after taking account of the premium cost.

Introducing broker

Sometimes called a half-commission man; an individual who introduces a client to a clearing member of the LME and usually initiates his trades. See also Give-ups.

In warehouse

Buyer of metal in warehouse is responsible for all costs of removing the metal to his own transport. The basis of delivery under MMTA contracts. Title to metal sold under LME contracts passes with delivery of the warehouse warrant. LME prices therefore refer to metal lying in LME warehouse.

The product of the smelting of iron ore and the raw material for steel. Pure iron is a relatively soft metal, but it is rarely encountered as the reduction of iron ore by established processes produces impure forms. Small impurities, particularly carbon, make iron much harder. Steel is iron within which a carefully controlled percentage of carbon has been widely dispersed. This makes it many times harder and stronger than pure iron.

Iron carbide

A compound of iron and carbon forming naturally in a blast furnace. Small quantities within the metal have mostly positive effects on performance, but large quantities are undesirable for a number of reasons - most significantly in establishing potential weak points. Oxygen pumped into the converter reduces carbide content; carbon has a greater affinity to oxygen than it has to iron (or any of the other elements likely to be present) in the liquid metal emerging from the furnace. The carbon is oxidised, leaving the converter as carbon dioxide. Iron carbide has been used experimentally as a small scale supplementary source of iron units in an EAF alongside the normal feed of ferrous scrap.

Ironworks

Plant smelting or direct-reducing iron ore to produce pig iron. If integrated forward to steelmaking, may deliver the iron as hot (liquid) metal (see torpedo ladle) to the steelworks on the same site.

ISDA

International Swaps and Derivatives Association. Mainly concerned with OTC markets.

International Trade Commission. A body formed of nominees from US Congress to rule in anti-dumping cases (thus it is not an "International Commission on Trade", but a US commission on international trade). Under US procedure, the Department of Commerce responds to companies complaining of unfair competition from foreign suppliers by conducting research on production costs and market prices. If there is a prima facie case that the US plaintiffs have been injured, the ITC rules whether there is sufficient actual or potential injury to impose countervailing tariffs or set minimum landed costs on foreign materials. Steel or steel products have featured in many US anti-dumping cases.

Izod

A test for the notch-sensitivity (effectively brittleness) of metals and alloys.

A system (JIT) adopted by manufacturers by which production lines receive materials and components for immediate use. The aim is to reduce financing costs of work in progress by minimising the quantities of raw materials or components held in stock and the time they are held. It sets stringent demands on logistics (the reliability of suppliers' deliveries) and on the reliability of the products or components themselves since it leaves little or no reserve of components or materials if a batch includes any that are off-specifications. It also greatly increases the risks of using components or materials from geographically distant and diverse sources.

jv

Short for joint venture. Most obviously between two miners with contiguous deposits. May also be arranged between a smelter and miner to develop a deposit, or between parties elsewhere in the production chain. May even be arranged between two merchants for a specific transaction or series of transactions.

This is a period at the end of each LME session (am and pm). In the morning all metals are rapidly traded around the ring from after the reading of Official Prices until 14.45. In the afternoon specific times are allocated to the different metals. Kerb trading is often expressed simply as "on the kerb" or "kerb". The facility is not common on other metal futures markets. The term comes from the early history of commodity futures markets when trading after hours was literally conducted on the kerb of the street.

Killed steel

Steel with reduced oxygen content. The "killing" operation is applied to liquid steel; material with a greater affinity to oxygen is added to the melt. Aluminium is commonly used, hence aluminium-killed steel but other reactive metals can be used.

For higher specification (and higher value) steels, some processes, including alloying, oxide removal and desulphurisation can be carried out after running the newly produced liquid steel into a separate ladle, in which its temperature can be maintained or adjusted prior to casting while operations are carried out (to reduce impurities or add alloying metals etc)..

Lance

A steel tube for introducing a gas , eg, oxygen, into a bath of molten metal, mostly steel. See BOF.

Last trading day

On futures markets which trade in monthly positions, the last trading day before a particular month's contract is delivered.

L/C

Letter of Credit. A bank instrument normally used to settle international trades.

LCFeCr

Low carbon ferro-chrome, 0.3-0.6% C. See HCFeCr and charge chrome.

LCHClearnet

The organisation that clears LME trades. See also Clearing house.

Lead time

(i) The interval between placing an order and material being delivered. (ii) The interval between the decision to commission a new mine or plant and its coming on stream.

Leaded

See free machining.

Lemel

A precious metal trade term for scrap turnings and filings.

Lend

A carry trade whereby a market participant sells a nearby prompt and simultaneously sells a prompt in the longer-term.

Lending

Derived from lending metal to the market. Selling metal on a nearby date and simultaneously buying it back on a forward date, thereby extending a long position. See also Borrowing.

Limestone

This is an important flux added to the blast furnace burden to react with impurities to form a slag that can easily be removed from the furnace. The heat of the furnace reaction splits the limestone (calcium carbonate) into carbon dioxide and calcium oxide, which reacts with impurities like silica, sulphur, alumina and magnesia. The slag that results floats on top of the liquid iron. The dolomite form of limestone, which contains magnesia, can be used, straight, or in a blend with ordinary limestone because the magnesia it bears will be captured in the slag at high furnace temperatures.

Limit

In some futures markets (e.g Comex, SHFE) there is a limit to the rise or fall in the price of a commodity during a given period of time, usually a day. Once this limit is reached, trading is suspended until a prescribed period of time expires, when trading can resume. The suspension relates only to forward positions, the spot month continuing to trade.

Limit order

A futures order placed by a client to buy at up to, or sell at down to, his least acceptable price.

Limonite

A major type of iron ore. See also haematite and magnetite.

Liquidation

Closing out of a long position. It is also sometimes used to denote closing out of a short position, but this is more correctly referred to as covering or covering in.

Liquidity

(i) The ability of a futures exchange to handle large volumes of business in a limited time. Influenced by the volume of stocks available for trading and the number of traders active. (ii) The availability of stocks for trading and active traders. See also squeeze. (iii) Measure informed by the volume of trade in a particular market that defines the ability of an instrument or asset to be bought or sold without affecting its value (see liquidity risk).

Liquidity risk

The risk that a party interested in trading an instrument or asset cannot do so because it is unable to find a willing counterparty.

LME

London Metal Exchange. For fuller information on the exchange see Metal Bulletin's Guide to the London Metal Exchange or the exchange's own Rule Book.

LOA

Length overall - gives the length of a vessel and governs the quays at which it can berth.

Local

See day trader.

Loco

German trade term equivalent to spot.

Long

(i) An open purchased futures position. Thus "to go long" means starting a transaction by the purchase of a futures contract. (ii) Equally a producer or a processor may be long of physical metal if his supply of metal exceeds his sales orders.

Long call

The position held by the holder of a call option. Opening a long call is usually a strategy motivated by a view that the price of the underlying asset will rise. The risk of holding a long call position is limited to the option premium, while the potential reward is unlimited.

Long put

The position held by the holder of a put option. Opening a long put is usually a strategy motivated by a view that the price of the underlying asset will fall. The risk of holding a long put position is limited to the option premium. The potential reward is limited by the difference between the strike price and zero.

Long products

Self-explanatory term mostly used in steel to refer to products such as rod, rebars, rails and structurals.

Long ton

The old avoirdupois ton of 2240 lb. Still used in some iron ore trade. See also metric ton and short ton.

Look back

A fairly rare facility in a period pricing contract, allowing the buyer to refer to a price of a day or week earlier than that when the next delivery is to be made. Valuable in a rising market.

Lost wax

A method of casting very accurate shapes. A wax model is coated in a refractory (i), the wax melted out and metal poured into the cavity. Traditionally used for sculptures, it is also used to make parts in refractory (ii) metals such as turbine blades.

Lot

The minimum amount of a commodity in which one may deal on a futures market. On the LME a lot is often called a warrant or contract.

Low alloy steel

See HSLA.

Lumpy ore

Iron ore that is lumpy as-mined and ready to charge to the blast furnace (unless the iron content needs upgrading). See also Fines.

The attraction between some metals and some compounds of metals due to a particular orientation of their molecules; hence metals capable of attaining magnetic properties or of being attracted to a magnet. In practice used only of metals with strong magnetic characteristics, as many metals register at least some reaction to magnetic forces. Iron in most forms (hence also ordinary steel) nickel and cobalt are strongly magnetic. Some iron ores are magnetic, but some grades of stainless steel notably austenitic stainless steel, are non-magnetic or only very weakly magnetic.

Magnetic separation

(i) Where ores contain magnetically attractive metals, concentration may be effected dry with magnets and conveyor belts. (ii) Also used to recover ferrous materials from streams of mixed domestic waste.

Magnetite

A major form of iron ore. See also Haematite and Limonite.

Malleable iron

Iron castings which have been made less brittle by heat treatment. There are two types, known as blackheart and whiteheart. See also SG iron.

Malleability

A measure of the ability of a metal to be formed to a new shape by hammering, forging or rolling, without cracking or otherwise failing.

Mandrel

A solid bar used in the production of welded tubes. The newly welded tube is expanded to its finished dimensions by being drawn through a die setting the external diameter over a mandrel setting its internal diameter. Several pairs of dies and mandrels may be used to achieve the final dimensions. The process provides close tolerances in dimensions, uniform wall thickness and hardens the tube shell.

Manifest

Ship's document listing the packages in the vessel's cargo. It must be lodged with local Customs before unloading can begin.

Maraging steels

Nickel-containing steels which attain their highest strength by heat treatment followed by ageing for several hours at lower temperature. See also Age hardening.

Margin

The difference between the spot price and forward price quoted for a commodity. In futures, the security deposit that buyers and sellers must place with the clearing house to guarantee they will perform as agreed. See Initial Margin and Variation Margin.

Marine store dealer

The first operator on the scrap collection chain who has premises.

Mark to market

Revaluing an open position on the basis of current market price, usually to assess the need for a variation margin.

Market

(i) The location of trading. (ii) The current price of a commodity. (iii) The community of companies and individuals concerned with producing, trading and consuming a metal.

Market order

An order to buy or sell a futures contract at the first obtainable price or prices on the market for the tonnage involved. If the order is given "with discretion" the broker may execute it over time as he sees fit; if "without discretion" he must hit every bid or offer as it appears until the order is filled.

Market maker

On some futures or terminal markets, but not the LME, one firm or a few may be designated market makers and are obliged to be buyers and sellers at all times, sometimes in exchange for certain market benefits.

Market risk

The risk that the value of a derivatives contract will decrease due to an adverse movement in market factors.

Market surveillance

Exchange-run supervision of market integrity.

Mark-to-market

Accounting practice by which value is assigned to a position held in a financial instrument based on the current fair market price for the instrument or similar instrument. In futures market places, this takes place on a daily basis. .

Martensite

The form of iron or steel crystallisation resulting when the metal is cooled rapidly from a high temperature (quenched). Very hard but inclined to be brittle. Its structure makes it low in carbon. Hence martensitic, a class of low carbon stainless steel (0.12%C) based on steels of this crystal structure.

Martensitic

A heat treatable type of stainless steel with some of the characteristics of austenitic.

MASP

Monthly Average Settlement Price. The average of a month's daily official settlement pricesThe value for settling Tapo exercise on the LME.

Master alloy

An alloy, usually non-ferrous, with a high content of an alloying metal. The master alloy is more easily added to a specification alloy mix than the metal itself. See also ferro-alloy.

Matching system

The system operated by the Clearing House for the matching and confirmation of futures exchange contracts between clearing members. The process of allocating a buyer and a seller to a particular trade.

Matte

A first fusion product suitable only for further refining.

Maturity

A forward or futures contract reaches maturity when its delivery date arrives.

Mean of four

An expression in base metal period pricing contracts where the reference price is the average of LME buyer's and seller's prices in both the cash and three months positions.

Member (exchange)

An entity that is approved by the relevant regulator to operate on an exchange, particularly on behalf of others as a broker. Members are sometimes shareholders in an exchange and are sometimes categorised in light of their access to trading environments and their ability to execute on behalf of others.

Merchant

A metal merchant, as distinct from a producer's agent or broker, often acts as a principal, buying steel, metal, concentrate or scrap from producers and others and selling it on to others. He will often hold metal on his own account while waiting for a buyer or go short.

A wide-ranging variety of small and medium standard-sized long products available from mills, including a variety of cross-sections (round, square, oblong, hexagonal, etc) and some shapes such as angles and channels. The term is not usually applied to rebar and mesh rod used for reinforcing concrete or for long products of engineering quality.

Mesh

(i) Steel network used to reinforce slabs of concrete or, in cage forms, to reinforce concrete columns or beams. (ii) Particle size - this reflects the fineness of the screen or sieve through which ores, grains of products, powders or the product of any grinding process are passed prior to use.

Metal Service Center Institute

Institute North American association of steel and metal stockists. Issues statistics and reports.

Metal spraying

Applying one metal in powder form to the surface of another, e.g. zinc or aluminium to steel for corrosion resistance, or tungsten carbide to a knife edge. A process sometimes suitable for use in situ, on bridges for example.

Metric ton

Also called tonne. 1,000 kg or 2204.6 lb. See also long ton and short ton.

Micro alloys

A generic name for the alloying elements used in HSLA steels.

Micum

A measure of the strength of blast furnace coke. It is calculated from the percentage of coke particles of a target size range remaining after a sample has been rotated for a period in a drum. It measures in particular the abrasion resistance and impact resistance of the sample. .

MiFID

Markets in Financial Instruments Directive. EU legislation covering investment intermediaries and financial markets. MiFID replaced the Investment Services Directive and introduced new and more extensive requirements that firms have to adapt to.

Mild steel

This is ordinary or carbon steel that has a relatively low carbon content (up to 0.25%) which has not been hardened by treatment, so remains ductile.

Mill

(i) The complex of crushers, ball mills and flotation cells that comprise a concentrator. (ii) A rolling mill. (iii) A metal-cutting machine that complements a lathe by producing flat surfaces, keyways etc.

Millscale

Heavy oxidation on the surface of e.g. hot rolled steel coil. Can be recycled for the metal content after removal by abrading or pickling.

A (relatively) small scale steelworks; usually applied to an EAF steelworks with its attached steel rolling and treatment circuits. These mills use primarily ferrous scrap as raw material, to which DRI or iron carbide may be added to achieve particular product chemistry or structure.

Minimum fluctuation

See Tick.

Minis

Contracts on the LME and other futures markets with a smaller than standard lot size. May also be only cash-settled.

Min-max

(i) An option strategy involving selling an option (e.g. a put option) to fund the purchase of an opposite option (i.e. a call option). (ii) The expression may also be used in physical period pricing contracts, where limits are laid down to movement in the reference price. Beyond the limits, renegotiation is usually called for.

Minor metals

Non-ferrous metals of smaller volume of international trade and frequently higher value than base metals. Often by-products. See also exotic metals and MMTA.

Mischmetal

see Rare Earths.

MIT

Market if touched. A term commonly used by chartists. It is an instruction to buy or sell at market if a certain level above or below the current price is reached.

North American Free Trade Agreement. A trading bloc covering the USA, Canada and Mexico.

Naked option

A speculative option which the buyer or grantor does not have the resource in metal to cover. An unhedged position.

NAP

Notional Average Price on the LME. A daily average figure which rolls forward through the month to end up as the MASP.

NAPMI

National Association of Purchasing Managers Index. Important US measure of economic health.

Native metal

Actual nuggets of metal occurring rarely in rich ores.

Nearby

A date/contract that is relatively close to the cash/spot/expiry date.

Net position

(i) An operator's position after offsetting all his long positions in a metal against all his short ones. (ii) May also be calculated on all his open positions in futures regardless of commodity.

Nickel pig iron (NPI)

A source of nickel and iron, usually also including chrome. A blast furnace loaded with a burden of laterite ore containing a percentage of nickel too low for conventional nickel smelting with iron ore and usually combined with chrome ore, is reduced in a to a nickel-chrome-iron feed for the production of stainless steel. Although referred to as a version of low-grade ferro-nickel, it is closer to nickel-bearing scrap in chemical terms. Its use is almost entirely confined to China, where output rises when conventional nickel sources are expensive, and falls when the price of nickel drops.

Nickel silver

A copper-based alloy with zinc and nickel, used for example in cutlery.

Nimonic

A group of nickel-based alloys used in jet engines.

Nitriding

A process of case-hardening steels of appropriate composition with nitrogen to give superior results to case hardening with heat alone.

NMPT

Non Market Price Transaction. A deal at a price agreed between broker and client that is not the current LME price for the relevant position, usually a historic price. Special rules apply to managing and clearing such a transaction.

(i) On the LME, an estimate of the price for a future month date which is used to designate a closing price when no trading has taken place in that date. (ii) Also used for current price indications in a source like Metal Bulletin in similar circumstances in physical trading.

Non-ferrous metals

All metals except ferrous metals.

Non-magnetic

Most non-ferrous metals are non-magnetic, except nickel and cobalt, which are strongly magnetic. Most ferrous metals are magnetic except some grades of stainless steel.

Notched bar

An ingot which has several deep notches along its length to enable it to be broken and allow precise amounts of metal or alloy to be added to the melt.

Novation

The technical term for the process whereby trades on a futures exchange between clearing members are taken over by the clearing house.

Oil Country Tubular Goods. Refers to a category of larger diameter steel pipe.

OD

Outside diameter of a tube or pipe.

Offer

The price the seller asks for the commodity on offer. See also Bid.

Off-exchange

A contract or trading activity which takes place outside any exchange, so is, by definition, OTC.

Official prices

Prices established by the LME as the closing prices at the end of the morning session.

One Cancels Other (OCO)

On futures markets, a trading instruction incorporating two orders with a built-in further instruction to cancel one if the other is executed. The order can indicate two different price levels or a combination of price and time limits.

Open cast mining

Mining technique used for large deposits near the surface.

Open interest

Futures positions on an exchange that have not yet been closed out, ie, remain to be fulfilled. Published by some futures exchanges as an important statistic for relevant contracts.

Open outcry

The method of face-to-face dealing employed on the LME Ring and on some other futures markets in the pit. A broker announces to the other brokers present his interest to buy or sell the commodity, and the required delivery date and price. When another broker responds to accept the bid or offer and proposes a quantity, a deal is struck and that price becomes the latest traded price for that delivery date.

Open pit

Mining technique for large disseminated deposits near the surface.

Open position

A forward market position which has not been closed out. See also Open interest.

Option

An option is a contract which gives the buyer the right but not the obligation for a specified period of time to buy from (call) or sell to (put) the grantor or seller a specified quantity of metal at a specified strike price on a specified delivery date in return for payment of a negotiated premium. The option must be declared by the buyer on or before its expiration date, otherwise it is abandoned. If it is an Asian option or LME Tapo, declaration is automatic if the option is in the money. See Assignment.

Option spread

The simultaneous purchase and sale of a pair of calls (or puts) in the same metal but at different strike prices or different expiration dates, or both. The option equivalent of a carry.

Order routing

System allowing clients to access online trading through a broker's system. All trades are executed in the name of the broker.

Organic coating

Application of a coating of paint or plastic (usually polymers) on a continuous processing line or through a batch process. In the steel industry the coatings are usually applied to galvanized coil to provide extra protection from oxidation or for decorative reasons.

Ore

Strictly speaking, metalliferous material in the ground, or at minehead. Regularly used also to refer to concentrates.

OTC

Over The Counter. Signifies a bilateral deal, usually between a broker or bank and his client, which does not take place on an exchange. It may have some of the characteristics of a futures contract, but if so is usually called a forward contract because it is not exchange-traded. Increasingly exchanges and clearing houses offer to clear OTC contracts, affording users protection from counterparty risk, while allowing them to keep the flexibility of OTC trading. Such trades may be subject to financial regulation in the country of the seller and/or buyer.

Out-of-the-money

An option whose strike price is above the current market price if a call and below it if a put.

Overbought/oversold

A market analyst's opinion that the market has moved further or faster than justified by all the known factors.

Oxidising

Iron and steel rust, that is oxidise, in wet conditions or in humid atmospheres. (The presence of salt (for example in sea water) or other chemicals also contribute to hastening corrosion.) A coating of zinc or other metal coatings, or polymer coatings, protect the metal from oxidising atmospheres. The oxidising reaction is also used in steelmaking: oxygen is injected in liquid iron in the converter to reduce carbon content. Carbon has a greater affinity for oxygen than for iron; oxygen combines with both free carbon and carbon in compounds (such as iron carbide) and is released as carbon dioxide. See also Reducing.

A technique of rolling two thicknesses of thin sheet or foil together and then separating them.

PAH

Abbreviation for polycyclic aromatic hydrocarbon.

Panamax

The largest size of vessel that can pass through the Panama Canal. See also Capesize.

Participating call

A strategy for using futures and options with many of the characteristics of a synthetic call.

Passivation

A technique for controlling the chemically reactive condition of a metal product or the surface of a metal product to make it less reactive. Agglomeration may be sufficient to passivate small particle or spongy material (hence hot briquetted iron); passivation of surfaces usually requires chemical treatment.

PCI

Pulverised coal injection, a technique making it possible to use a proportion of non-metallurgical coal directly in a blast furnace, as a substitute for some of the more expensive coke providing the main source of reducing gas..

A technique of blasting the surface of metal with shot. Improves appearance and hardens the surface.

Pellet

(i) In iron ore, fines are blended with clay and rolled into pellets of 6-10mm diameter and sintered to make a suitable charge to the blast furnace or for direct reduction. (ii) In some metals, notably nickel, the metal in powder form is compacted into pillow-shaped pieces about 3cm square also known as pellets. Nickel produced by the Inco process from nickel carbonyl is also in spherical pellet form. See also briquettes.

Period pricing

A contract for physical metal supply over a period (usually a year or a quarter) in which all elements except price are settled in advance. Invoices are then structured on, for example the average of the LME price or Metal Bulletin quotation for that metal for the month of delivery. See also Reference price and Benchmark.

Petroleum coke

Also known as 'pet coke'Â. Solid or near-solid residues of crude oil remain after the lighter components have been distilled off or otherwise drawn off or reconstituted through chemical and catalytic reactions. These residues consist of predominantly of carbon and are used to produce electrodes for metal smelting and for steelmaking in electric arc furnaces (EAFs). Crude oils with high aromatic content are the preferred sources of petroleum coke for electrodes.

Another way of referring to an allotropic form of an element such as iron or steel (or sulphur, or carbon, etc).

Physical

Trade in the commodity itself, as distinct from trading it on a futures market.

Pickling

Immersing hot rolled steel, for example, in acid to remove millscale.

Pig

(i) A rough cast shape from the blast furnace, eg, pig iron. (ii) Also the standard form in which lead is traded internationally and delivered on the LME. See also sow.

Pig iron

The product of the iron blast furnace as immediately cast into moulds. The name originates from the long, rounded shape of the traditional mould. It is not pure metal - elements in the original ore are present, sometimes in compounds. Pig iron usually includes more than 2% carbon (free or in carbides). Traded pig iron usually meets the following standards: Mn <30%, Si <8%, P <3%, Cr <10%, other impurities <10%..

Pit

The trading floor on some futures markets. Unlike the LME Ring, dealers are not organised, but jostle. Several markets have abandoned pit trading in favour of electronic trading.

Plasma ironmaking

A relatively new high-speed, low-energy ironmaking process for making small volumes of iron.

Plate

Thick rolled metal. May be sold as such, especially in steel and aluminium, or rolled further to sheet. Flat product which is usually thicker than 3 mm, mostly in a range of 5-80 mm (0.2 inch to 3 inch plus). The highest specifications are met by plate produced in a reversing mill (discrete plate), but some applications can use thick hot-rolled coil cut to size

Platform

Jargon word for the type of futures trading in question - open outcry, electronic or telephone, but mostly refers to the particular system used for electronic trading, including proprietary systems.

Poling

A reducing operation in refining, especially of copper. Originally performed by introducing greenwood poles into the melt, it may now be done by bubbling gas.

Position

The number of futures contracts a participant has open to buy or sell an asset.

Position limit

Set by regulatory bodies or internal controls to limit the size of positions held. A value limit on the futures trades a broker will perform for a client. On the LME this is often with particular reference to the credit extended by the broker to the client. Control on an individual broker's or client's positions is one of the instruments the LME uses to prevent abnormal trading developing, such as a squeeze.

Potline

A row of large cells for the electrolytic reduction of aluminium from alumina. A potline may have an annual capacity of 100,000 tons or more and a smelter may have up to ten lines.

Powder metals

A distinct branch of metallurgy. Powder metals may be compacted and sintered to form finished components with particular characteristics, used in surface coating techniques or even burned in pyrotechnics.

Precious metals

Gold, silver and PGMs. See also Noble metals.

Premarket

At the LME, trading electronically or over the telephone among brokers before the market opens for ring-dealing. Premarket trading can be very active, influenced by the hedging operations of producers and consumers.

Premium

(i) The cost of buying an option. Non-refundable even if the holder does not exercise the option. (ii) The amount by which the price for one delivery date is greater than that for another date. (iii) The difference in price between different refined products, e.g. between non-ferrous ingot and billet. (iv) The addition in price over a reference price negotiated between physical trading partners for a specific product, delivery location or date.

Premium (physical)

Charge negotiated by a seller of an asset that is supplementary to a benchmark as part of a strategy designed to establish a strong correlation with a futures market and minimise basis risk. Discounts are also applicable.

Price (used as a transitive verb)

To fix the price of a purchase or sale on one or more LME quotations, usually the official settlement price for the metal concerned. Alternatively on a Metal Bulletin quotation.

Price-fix hedge

A hedge designed to lock in for a future date, up to several years ahead, a price that the hedger (typically a miner or end-user) will find acceptable.

Price-making

As a result of the price discovery that results from its trading, a futures market is price-making. So also is a trade newspaper like Metal Bulletin when it evaluates quotations. See also Reference price, period pricing, price-taking.

Price-taking

Parties to a period pricing contract are price-taking when they import a reference price into the operation of their contract. See also price-making.

Pricing-in (out)

When a merchant agrees to buy a quantity of metal from, for example, an overbought consumer, both parties will agree in advance that the price basis will be the closing price of a specific ring or rings on the LME. The buyer will therefore be pricing-in on the close of that ring, and will probably hedge his purchase by selling during the closing stages of that ring. The consumer will be pricing-out and may hedge by buying at the close. Pricing on the basis of non-futures market reference prices cannot normally be hedged.

Primary metals

Metal which has been produced from ore as distinct from that produced from scrap.

Prime broker

Brokers that act as settlement agents, provide custody for assets, provide financing for leverage and prepare daily account statements for clients. These clients are normally professional investors like money managers and hedge funds.

Prime Western

US zinc grade min. 98%.

Principal

A person or organisation able to make, and obliged to fulfil, all the conditions of a contract.

Prompt

For immediate delivery. On the LME this is in two days' time (but see Tom-Next)

Prompt date

The date at which a futures contract is due to be delivered against or cash-settled, or the date at which an option is due to be exercised or expire. See delivery date.

In direct proportion. (i) Term used in Customs tariffs. (ii) In basis and scale pricing, when the unit value of the scale is the same as in the basis, it is said to be pro rata.

Put option

An option granting the purchaser the right to sell.

PVD/CVD

Abbreviations for physical vapour deposition and chemical vapour deposition. These are methods of applying metallic, organic and inorganic coatings to steel.

Pyrites

A copper-iron sulphide mineral.

Pyrolisis

A process of heating material in the absence, or almost complete absence, of oxygen, so that it is not oxidised, but volatile components or elements are driven off. The principle process carried out in a coke oven.

Immersing steel in oil or water after heat treatment to control the rate of cooling and degree of hardening.

Quintal

100 kg. Quantity sometimes quoted in Customs tariffs.

Quotas

(i) Tonnage limits on the amount of a particular ore, metal or alloy that can be imported into a country in a month, quarter or year either absolutely or at a more favourable rate of import duty. (ii) Limitation of the tonnage of a particular material that can be exported from a particular country in a given period. (iii) A rationing limit per customer applied by a seller of a material in short supply.

Quotation

(i) The price at which the seller or buyer is willing to trade. (ii) An independent evaluation, for example by Metal Bulletin, of the going market price of a metal, ore, alloy or scrap in which there is no formal market.

A kind of rake for stirring solid material in a furnace. See, for example, Herreshoff.

Rail

Long product requiring specific treatment to support the wheels of railway locomotives, carriages, tankers and trucks. High-speed passenger trains demand special kinds of rail.

Raise

A shaft between two levels in a mine which has been dug from the bottom up.

Ramp up

In commissioning a new mine or plant, operations begin slowly and cautiously and are then ramped up to, or above, design capacity.

Random lengths

Long products (bar, tube) supplied in lengths as they come off the mill. See also Exact Lengths.

Rare earths

A group of metallic elements lanthanum, cerium, praseodymium, neodymium, samarium, europium, gadolinium, terbium, dysprosium, holmium, yttrium, erbium, thulium, ytterbium, lutetium. Clustering together in the periodic table, they are often extracted from cerium mischmetal (German for mixed metals). Their unique characteristics mean a new application can propel one or other of them from laboratory curiosity to exotic metal very quickly. Many notable for their uses in electromagnetic devices.

Raw metal

Unwrought primary metal.

R/C

Refining charge made by a copper refiner for refining anode copper. Usually expressed in cents per lb. See also T/C.

REACH

Acronym for Registration, Evaluation and Authorisation of Chemicals. EU legislation designed to protect the environment and human health by imposing stringent bureaucratic controls on all parties in the EU producing, trading or processing industrial raw materials. Registration is in process and Authorisation begins rolling during 2011.

Rebar

Short for reinforcing bar. Steel rod intended for incorporation in concrete to reinforce it. See also Debar.

Reducing

A term used in chemistry for a reaction that liberates an element (usually a metal) from a chemical bond (usually an oxygen bond); a metal oxide is thus 'reduced' to a metal. A reducing atmosphere is generated in a furnace to liberate metal from its ore. In a blast furnace the reducing atmosphere is carbon monoxide; each carbon atom attracts an extra oxygen atom from the iron oxide and liberates the iron. In the production of direct reduced iron (DRI) the reducing atmosphere consists mainly of hydrogen. See also Oxidising. In aluminium production alumina is reduced to the metal in the electrolytic cell.

Reference price

The price written into a period pricing, benchmark or other contract covering several exchanges, which may be subject to adjustments on agreed terms.

Refinery

A processing plant which produces high purity metal either by electrolysis, electrowinning or fire-refining. In copper and lead production, refining is preceded by smelting, but for tin, zinc and nickel, smelting and refining blend into one process of recovering marketable quality metal from concentrates. Refiners (and smelters) may also treat scrap materials. For aluminium, a refinery produces alumina, which is then fed into a smelter to produce the metal.

Refractory

(i) Heat-resisting material used, for example, to line blast and other furnaces and make crucibles. (ii) Describes metals that are extremely difficult to recover from their ores.

Regulator

A country's regulator is tasked with supervising the derivatives activity within the country. See FSA and CFTC.

Regulus

Old-fashioned word for a primary refined metal, now only used with antimony.

Reheat furnace

A furnace used to reheat steel semis to a temperature suitable for hot rolling.

Renege

Arbitrarily failing to perform a contract requirement, such as delivery or payment, without justification.

Residues

Secondary metal-containing materials that require smelting to recover the metal, as distinct from scrap which may only require melting and blending.

Resistance

(i) Chartist's term for when prices appear reluctant to move beyond a certain level. (ii) A type of wire used in electrical heating.

Reverberatory furnace

The simplest kind of smelting furnace in the form of a refractory-lined box up to about 40 ft (12.5 metres) long in which metal is kept molten in the bottom of the furnace by flame (oil, gas or coal-fired) reverberating around the upper part of the furnace.

Reversing mill

Equipment that forms material by reciprocating single pieces (that is, discrete pieces, not part of a continuous coil) between adjustable rolls rather than through a series of roll stands set in line calibrated to closer and closer gaps (as in a coil mill, which is also called a tandem millM). This method is used to produce the highest qualities of plate..

RIE

Stands for Recognised Investment Exchange within the UK's Financial Services Act. The LME is such an exchange.

Ring

(i) A five-minute open outcry trading period in a single metal on the LME. (ii) The circle of seats where such trading takes place. See also Pit.

Ring dealing broker

An organisation which is a Category 1 full clearing member of the LME and entitled to deal in the Ring.

Risk management

The management of metal price risk on an ongoing basis by the use of futures and options with a view to containing the impact of adverse price movements and enhancing profitability. The concept is an extension of the more simple type of hedging whereby the pricing of specific transactions or production streams is offset or fixed. More broadly, the management of price risk in any active portfolio of trading positions.

Roasting

Controlled heating of sulphide concentrates to convert them to the oxide by driving off and capturing the sulphur.

Rod

(i) Non-ferrous; a round, square or polygonal solid section supplied in straight lengths. Usually produced by extrusion. See also Wire rod. (ii) Ferrous. As for non-ferrous, except usually produced by rolling. Used to make mesh for concrete reinforcement or as a semi-finished product for wire drawing.

Rod mill

(i) A rotating cylinder like a ball mill, but loaded with steel rods. (ii) A mill for producing steel or non-ferrous rod.

Rondelle

A cylindrical shaped pellet. A standard form of nickel.

Roll

(i) To transfer a market position in futures or options from one date (forward or backward) or one strike price (up or down) to another by a simultaneous purchase and sale. (ii) The heart of a sheet or coil rolling mill, which may have from two up to ten or more rolls in one or a series of rolling stands. Also see CR and HR.

Rollover

Extending a futures position at maturity by re-opening the same position for a later date. See also Carrying.

Room and pillar

Mine development technique employed in good bearing ground.

Roughing stand

The first millstand in a hot rolling mill train or line (a series of stands), which reduces the steel to approximate dimensions.

Round turn

Expression covering the purchase and sale of a warrant by a broker for a client; the basis for charging commission.

Society of Automotive Engineers (USA). Issues specifications for metals used in car manufacture.

Sampling

Where a large tonnage of ore, metal or scrap requires assaying, perhaps at the port, representative samples must first be taken from the bulk. This is a skilled operation for which standard procedures are laid down. An assay of this type of material is only as good as the sample that has been taken.

SAW

Submerged arc welding. A technique sometimes used for pipe production.

SBQ

Special Bar Quality. Steel bar products beyond the commodity grades of merchant bar (such as rebar or construction bar), but below the specialist products such as stainless steels and nickel alloys. SBQ is generally used in the USA, while in Europe the term 'engineering steels' is more common. Both terms refer to steel types as well as to bar products, so also refer to qualities of billet and slab as well as bar.

Scale

(i) See basis (ii) Heavy oxidation on the surface of, for example, hot rolled steel coil. Can be recycled for the metal content after removal by abrading or pickling. Scrap (i) Production (or 'prompt') scrap; metal arising from fabricating processes such as edge trimmings from rolling, billet discards from extrusion or flash from castings. This is often recycled in-house. (ii) Process scrap; material such as steel turnings or brass swarf arising from manufacturing processes. (iii) Old scrap; material arising from artefacts at the end of their useful lives such as buildings, motor cars, domestic equipment, ships, cables and machinery. Metal scrap always has value unless it is in tiny amounts and difficult to collect.

Scarf

A method for correcting surface defects in iron or steel using flame cutting. Attachments for doing this in-line during rolling are sometimes referred to as 'hot scarfing units'.

Scrap

Industry recognises several classes of scrap: (i) Old scrap or 'obsolete' scrap; steel manufactures and fabrications that are no longer used - drinks cans, old cars and other machines, a demolished bridge or building. (ii) Manufacturers' scrap or 'new production scrap' (sometimes called 'prompt' scrap) arising on production lines as pattern off-cuts or as turnings from cutting machines. (iii) 'Home' scrap or 'revert' or 'run-around' scrap, process loss and off-cuts arising at steelworks - initial sections of steel tapped from furnaces, the beginnings and ends of coils, any spoiled material. Old scrap needs to be sorted and cleaned and organic coatings removed before it can be recycled in an EAF. Many scrap merchants have invested in advanced sorting and treating lines, so as to be able to classify and guarantee the chemistry of their scrap. Manufacturers' scrap ranges from large, relatively clean and compacted off-cuts (as, for instance, from carmakers) to bundles of turnings contaminated by cutting slurry and lubricants. In some cases steelmakers contract with end-user customers to sort their cleanest scrap for returning to the steelworks. Home scrap is highly prized; its chemistry and metallurgy is known and it is relatively clean. It is the preferred feed for the basic oxygen furnace at an integrated steelworks.

s/d

Solid drawn. Refers to tube that is not welded.

Seamless tube

The homogenous microstructure of seamless tubes makes them stronger than welded pipes. Round billet is pre-heated and rolled at high speed between rolls set at an angle to each other. The stresses this sets up within the billet makes it easier to pierce it with a pointed bar to create a tube shell. The shell is lengthened by being passed through rollers (determining the outside diameter) with a mandrel inside (determining the internal diameter) or by re-heating and being drawn through a collar, with a mandrel again inside.

Secondary metal

A general term for metal (including iron and steel) produced from scrap instead of primary raw materials.

Secondary metal dealer

A firm which specialises in buying and selling scrap metal in bulk. They then sort it and sell parcels of specification scrap to iron and steelworks, refiners, ingot makers and foundries. The largest firms operate internationally. Nowadays often called recyclers.

Secondary metallurgy

This term refers to treatments beyond initial steelmaking, usually in a separate vessel (such as a ladle furnace), which refine the precise chemistry and metallurgical structure of the steel.

Sections

This term applies to steel long products of various cross sections, particularly those used for construction - medium and heavy structural sections. They range from large beams (I-beams, H-beams, wide-flanged beams) to sections of right-angle or channel cross-section. Extruded or rolled long products of relatively complex cross-section. Sometimes also drawn.

Securities and Exchange Commission

The US federal agency which holds primary responsibility for enforcing the federal securities laws and regulating the securities industry, the nation's stock and options exchanges and other electronic securities markets in the USA.

Select

The LME's electronic trading system.

Sellers over

The opposite of buyers over.

Seller's price

The higher price in the ranges of cash and three months prices announced at the end of each LME session. See also settlement price. Other futures markets may quote a single closing price, so do not have a seller's price.

A special type of rolling mill with multiple rolls in a cluster formation to apply very high pressure to the work rolls in contact with the coil passing through the mill. Cold rolls faster and more accurately than conventional types of mill. Often used for stainless steel production. (Also see AGC).

Sentiment

The collective mood of a market. Sometimes influenced by fundamental factors and news, sometimes technical factors, and sometimes neither.

Service centre

A term introduced to describe a steel distribution workshop that carries out some cutting or pre-treatment of standard steel products on behalf of end-user customers. As a minimum this would be cutting coil to size, slitting wide coil or sheets or drilling. Most large distributors and dealers carry out some form of service, so the term is widely used to refer to steel distributors as a whole. Some service centres offer a very wide range of services, including (in association with steel mills) the final inspection of products, and as such take responsibility for the quality, dimensional tolerances and so on of products delivered. See also 'just in time'.

Session

The period each day during which an exchange permits trading. There are two sessions on the LME each day, one in the morning and one in the afternoon. Each session comprises essentially two five-minute 'rings' for each commodity, followed by a 'kerb' period. On other futures markets a session usually equals the working day.

Settlement price

On the LME, the last unfulfilled offer to sell cash at the close of the second morning ring in each metal - i.e. the cash seller's price at that close. This price, which is officially announced on the LME floor, prevails as the accepted cash reference price for the metal for the succeeding twenty four hours. On other exchanges, it is more usual to take the closing price at the end of the day as the settlement price.

SG iron

Spheroidal Graphite cast iron. Cast iron which has been made malleable by the addition of ferro-silicon to change the form of the graphite to spheroidal. Also called ductile iron.

Shaft

Vertical or inclined passage in mining for access and ventilation.

Shaft furnace

A melting furnace classically used (i) for continuous melting of copper cathode as the first stage in the continuous casting and rolling of wire rod; (ii) for direct reduction of iron; (iii) sometimes used for other metals.

Shaking table

A simple method of concentrating some ores. The heavy mineral gravitates to one end of the table, the lighter gangue to the other.

Shape

Non-ferrous; a loose term for unwrought metal forms designed for semi-fabrication such as billet and rolling slab. Comparable to steel semis.

Sheet

A thin flat rectangular piece of rolled metal. May be hot rolled or cold rolled. Nowadays almost always cut from coil.

Sheet piling

Long narrow steel plates, profiled to interlock and provide a barrier to support excavations etc.

Sheffield plate

An old method of cladding copper artefacts with a thin sheet of silver. Superseded by electroplating.

shex

Shipping term relating to loading - Sundays and holidays excepted.

SHFE

Shanghai Futures Exchange. Biggest metal futures exchange in China.

shg

Special High Grade. The highest commercial grade of zinc produced electrolytically and sold as slab. 99.99%, but LME-deliverable brands must assay 99.995%.

Shim

Steel or brass strip rolled to a precise thickness, usually below 0.5 mm.

shinc

The opposite of shex.

Short

(i) A futures market commitment to sell material at a future date for which the holder does not have the underlying metal. To go short is to sell forward with the expectation of buying back at maturity at a lower price. See also Bear. (ii) A short physical position is where the producer or fabricator has a forward delivery commitment for which he does not have the metal in hand. See also long.

Short call

The position held by the seller of a call option. The risk of holding a short call is potentially unlimited, while the potential reward is limited to the premium.

Short put

The position held by the seller of a put option. The risk of holding a put option is limited by the difference between the option purchase price and zero, while the potential reward is limited to the premium.

Short ton

A ton of 2,000 lb, mostly used in the USA . See also long ton and metric ton.

Shredder

A powerful machine used in the scrap industry to batter large items of scrap such as cars and domestic equipment into fragments which are then sorted as between steel, non-ferrous and waste (also called fluff). See also chopping.

Side

One half of a trade - either buy or sell.

Silicon

A very abundant element; most sands are oxides of silicon, so silicon compounds are often present in the gangue of iron ore. Silicon's affinity with oxygen makes ferro-silicon (FeSi) a useful de-oxidant in steelmaking. Large concentrations in steel products are undesirable, but in small percentages silicon enhances magnetic properties, tensile strength and high-temperature performance.

Silver solder

A silver-based alloy for joining copper and its alloys more strongly than with soft (lead-tin) solder.

Heavy-gauge steel strip for forming into tube for longitudinal welding. See ERW tube.

Skimmings

The oxidised surface of molten metal which is removed from the furnace or crucible. Subsequently recycled to recover the metal value.

Skin pass mill

A mill used to fine-tune the surface finish, dimensions and physical properties of the surface of a coil of steel.

Slab

(I) The steel semi-manufactured product from which plate and wide coil are rolled. In the past liquid steel was first cast into ingots, which were re-heated and formed into slab in preparation for hot rolling. The general adoption of continuous casting has confined ingot casting to small scale or special steel production, so slabs are normally the first tradable steel product from a steelworks or are rolled immediately after casting to save the energy and expense of reheating. (ii) Non-ferrous equivalent intended for rolling into coil or sheet.

Slag

Waste from metal furnaces. In addition to ash or gangue still present in the burden, slags are the product of fluxes added to the burden to improve reaction efficiency or remove undesirable elements (by combining with them to make easily collected spoil). Slag can be useful. Depending on its chemistry and texture they may be suitable for road fill, ballast for cement, paving or building blocks, or industrial abrasives.

Slitting

A process of converting sheet in coils into strip by passing the metal through a machine with multiple rotary knives.

Slug

See calot

Smelter

A processing plant which produces crude non-ferrous metal by treating mine feed (concentrate) or residues. In the case of aluminium a smelter produces refined metal from alumina.

Soft-magnetic steel

Pure iron and near-pure forms of iron are magnetic and relatively soft (as are ferritic phase steels if they are left untreated). Soft iron and steel (sometimes alloyed with small additions of other strongly magnetic metals) are the preferred materials for the cores of electro-magnets. A magnetic field is created when an electric current runs through a coiled conducting wire. The power of the field is proportionate to the power of the current and the number of turns in the coil, but a soft iron or soft steel core concentrates the force of the field and this magnifies its power enormously. The magnetic effect ceases when the current is switched off (although some weak residual magnetism can remain in the core). Mechanical electric bells, motors, loudspeakers, and a large variety of industrial equipment, weaponry and scientific instruments depend on this electro-magnetic effect.

Solder

A low melting point alloy for joining copper and its alloys (eg, plumbing fittings, wiring). Traditionally eutectic lead-tin, the lead is now being legislated out of the alloy.

Solid drawn

Tube drawn down from a tube shell into straight lengths or in coils without a welded joint.

Sow

Trade term for a large lump of unwrought primary aluminium, usually about 750kg. Derived from early iron technology, when metal was cast into a large puddle from which smaller puddles flowed, thought to resemble a sow and her piglets. See also pig.

Spark testing

A process for sorting scrap metal, especially high speed steel. The metal is held against a grinding wheel and the colour and length of the spark assessed

Specialty steel (speciality steel)

US expression referring to higher-specification alloy steels.

Spectrometer

An instrument used to analyse the content of metals by vaporising a small part of a metal sample with an electric arc and checking the pattern of a spectrum of light passing through the gas against standards. The most common method of production analysis.

Spelter

Obsolete trade name for zinc. Antique trade name for a zinc-lead alloy used for small statues etc.

Spiegeleisen

An obsolescent low-manganese form of ferro-manganese.

Spirals

Sandy minerals such as mineral sands can be concentrated by slurrying and passing down a spiral channel to separate the heavy component.

Spiral welded tube

Large-diameter steel tube produced by winding coil on a mandrel at 45 degrees and welding the resulting seam.

Splitting limits

Where a contract specifies content of metal or impurities, ore or scrap is likely to be assayed both before shipment and on arrival. If the results do not differ by too much, a figure which is the mean of the two figures will be accepted. Splitting limits define what is considered not too much. Where the difference is outside these limits, an umpire analysis will be called and discounts or premia applied, or the parcel may be rejected.

Sponge

The form in which certain primary metals are recovered, namely platinum, palladium and titanium. .

Sponge iron

Another name for direct reduced iron (DRI), because of the aerated structure it forms as it crystallises.

Spot

(i) Physical; immediately available at a named location. (ii) The price of a contract at the first available settlement date (also known as cash). (iii) Futures; see spot month.

Spot month

The first deliverable month for which a quotation is available on a futures market. For example, "March is now the spot month on Comex". As the LME trades in daily dates, it does not have a spot month. See Cash.

Spot testing

A method of identifying scrap metal by adding drops of one or more acids to the sample and studying the colour change, reaction etc.

Spread

The distance between two prices - eg, buyer and seller or spot and forward. Also a trade in which two or more instruments such as derivative contracts are engaged in simultaneously with the aim of profiting from a favourable change in the relative value of the two instruments, while being protected against overall market movements. See also Arbitrage.

Spread bet

A type of contract for difference, less formal than futures contracts, that can be placed on a large variety of scenarios. Accuracy can be a factor in settlement.

Spring steel

A medium carbon steel with high yield strength obtained by alloying with silicon and manganese.

Squeeze (short squeeze)

Pressure on a particular delivery date which makes the price of that date higher in relation to other dates. An upward price movement caused by covering of short positions. See Corner.

Stainless steel

Corrosion-resistant alloy steels containing chrome developed in the early 20th century. Most stainless steel currently produced also contains nickel. Further alloying metals, most notably molybdenum, are contained in specialised formulations. Steels in the large, and ever-expanding, range of stainless alloys are usually classified according to the phases of their steel crystal structure - ferritic, austenitic, martensitic. Some more complex alloys are classed as dual phase. See also Austenitic, Ferritic and Duplex.

Standard deviation

A statistical measure which compares variations in the values of a time series with the mean or average value, taking account of the number of observations in the series. Often used to assess or compare the degree of volatility of prices.

Steckel mill

A reversing mill that reduces the gauge of a steel work piece in a succession of iterations; a single set of rollers through which the worked steel passes, is (usually) re-heated and passes back after the gap between the rolls is reduced.

Steel

Iron that has been subjected to refining and further treatments, including, in some cases, the addition of alloying metals, to control its chemistry and physical structure. In its simplest forms the iron content is prone to rust (corrode by re-oxidation) and needs a protective coating, especially in humid and marine atmospheres.

Steelworks

A plant melting iron and/or scrap to make steel. May be integrated backwards to iron smelting, and/or forward to making semis and finished product.

Stockist

A stockist holds supplies of non-ferrous semis and steel products ready for sale to users. Stockists usually specialise either in steel/stainless steel/aluminium or in copper/brass/high-value metals. Known in the USA as Service Centers. See also Metal Service Center Institute A stockist function is also fulfilled by, for example, a builders merchant holding large stocks of copper tubing or plumbing fitments. See Fabricator.

Stop

A limit on the number of trades which can be matched.

Stop-loss order

A futures market order which becomes a market order to buy only if the market advances to a specified level or to sell only if the market declines to a specified level. As soon as this specified level is touched or breached the order is executed for the client at the next obtainable price or prices. There is no guarantee the order will be executed at the price specified. A stop-loss order is, as its name implies, instituted to prevent or minimise losses from either a short or long position. See also MIT.

Straddle

The simultaneous purchase (or sometimes sale) of put and call options at the same strike price. Normally used when an increase in volatility is expected.

Straits tin

Tin from Malaysia. The classic Grade A tin.

Strangle

The simultaneous sale (or purchase) of out of the money calls and out of the money puts for the same date.

Strike price

The price at which an option buyer can buy or sell the underlying asset. See Basis price.

Strip

Long lengths of narrow rolled material, usually sold coiled. Often produced by slitting coil. See also Hunter Douglas.

Structural section

Steel girders and heavy angles used in construction. See I-beam, H-beam and RSJ.

Sublime

A material which readily passes from the solid to the gaseous state without going through the liquid phase is said to sublime or sublimate.

Submerged arc welding

A method of welding whereby the welding electrode contacts the objects being welded beneath fluxes in granular form. Sometimes used for tube production.

Substrate

A base used for coating; cold-rolled coil is the substrate for galvanized steel.

Surveillance

(i) General term for independent services such as sampling and assay. (ii) Also relates to a futures market's supervision of its trading.

Sur Wagon depart

French for fot.

Swap

(i) A very broad category of derivative contract in which two counterparties exchange one cashflow or exposure for another. Swaps are OTC, though increasingly some are also cleared. (ii) Specifically, an agreement between a metal hedger and a broker or bank to swap a series of forward cashflows based on selling and buying at an agreed pair of prices. These may be fixed (a known LME price) or floating (a yet-to-be-determined LME average price). The instrument originated in the banking business, but is similar to an LME averaging agreement whereby a broker agrees to guarantee a hedger an average price for opening or liquidating a hedge.

Swarf

Small particles of production scrap arising from turning, milling and boring. Often contaminated with cutting oil. May be baled or briquetted for transport and melting. See also turnings.

SWORD

The name of the LME's system for electronic storage and management of warrants.

Switching

(i) On the LME, the exchange of metal in one warehouse for that in another, eg, Rotterdam for London. (ii) The movement out of one futures contract into another, usually further forward. (iii) In physical trade the exchange between producers or traders of two identical delivery commitments to different destinations which can thus be implemented with more cost-effective freight.

SX/EW

Stands for solvent extraction/electrowinning. For solvent extraction see Heap leaching.

Synapse

A new system for managing settlement being introduced on the LME.

Synthetic put (or call)

A combination of a short (or long) futures position and a long out of the money call (or put) option. This protects the hedger against prices moving in the direction he fears, but also allows him to participate in part of a favourable move.

A form of unwrought aluminium with a T-shaped cross section to facilitate handling by fork lift truck. Normally of 675kg pieceweight.

Taconite

Type of iron ore principally from the US Midwest.

Tailored blank

Steel pre-cut from a coil or sheet delivered to a press shop for drawing to final shape. The term may be applied to a blank that is simply cut to a pattern from a single sheet of steel or to a welded blank, a more complex fabrication cut from two or more types of steel and/or thickness.

Tailings

The slurried waste from a concentrator. See also flotation.

Tandem mill

A series of stands in a rolling mill that roll the steel passing through them in a single direction 'in tandem'. See also reversing mill.

Tankhouse

The place where electrolytic refining or electrowinning takes place. Comprises a series of electrolytic cells with DC power, cranage, electrolyte circulation etc.

Tapos

Short for Traded Average Price Options. An LME instrument basically structured like an Asian option where the strike price is an LME monthly average. This matches period pricing contracts where the reference price is the monthly average. Tapos are automatically exercised if in the money by the issue of a corresponding LME futures contract. See also MASP, NAP and Cross.

Tap-to-tap time

A measure of productivity in an electric arc furnace (EAF). It is the time taken to complete a production cycle from the time of emptying (tapping) molten steel from one batch to time of tapping the next. Time-saving procedures include early tapping and final refining in a secondary vessel and capture of furnace off-gases to pre-heat the next batch of scrap.

T/C

Treatment Charge. The charge made by a smelter for smelting concentrates or residues. When the smelter is vertically integrated with refining, the R/C is also included in the terms. Note that the T/C is charged, usually in dollars, per ton of material treated, not per ton of metal recovered. See also deduction.

Technical analysis

See chartist.

Teeming

Steel trade term for pouring molten metal, usually into ingot moulds.

Telephone market

Telephone market (LME inter-office). Network of LME members who trade with each other over the telephone, submitting transactions through the exchange for processing and clearing.

Tempering

Cold rolling subjects steel coil to enormous tensions and hardens the steel. Some of the tensions can be resolved by further, gentler, rolling, but this is difficult if the steel is brittle. Lengthy heat treatment of annealing in an inert atmosphere achieves an optimum combination of toughness, hardness and formability. Traditional tempering, a shorter process of successive heating and cooling, can provide an acceptable balance of strength and flexibility.

Temper rolling

See Skin pass mill.

Tender

(i) Competitive process whereby producers and physical traders are invited to offer for a defined supply contract, or bid for a mining concession, regular production, or parcel of metal or scrap. (ii) Notice to exchange's clearing organisation of intention to initiate physical delivery to satisfy a short position. Competitive process whereby producers and physical traders are invited to offer for a defined supply contract, or bid for a mining concession, regular production, or parcel of metal or scrap.

Tenor limit

Part of a broker's control of his exposure to a client by specifying the length of forward position for which he will allow the client to open a transaction. See also Credit limit.

Tensile strength

The standard representation of the tensile strength of a piece of steel is the maximum load applied to destruction/failure divided by the original cross-sectional area of the test piece.

Tension leveller

Some cold rolling lines pass the coil in line through a stand that detects and corrects uneven loads as the coil passes through the roll stands, which reduces excessive internal tensions within the coil as it emerges from the line. The technique may also be used after production to dissipate tensions without resorting to annealing which would be likely to reduce the hardness of the steel.

Terminal market

An institution or organized market where a commodity or other asset is traded and prices for said commodity or asset are determined. Lacks several features that distinguish a futures market.

Terneplate

Steel hot dip coated with lead. Traditionally a roofing material, it is still specified for some vehicle fuel tanks.

Ternary alloy

An alloy of three metals.

Thermit process

Proprietary process using aluminothermy.

Theta

Denotes changes in the value of an option with the passage of time.

Thin slab technology

Technique for the continuous casting of slab much thinner than the traditional products of an integrated slabbing mill - 50-70mm (2-2.75 inch) instead of up to 250mm (approximately 10 inch). It enables the making of flat products on a relatively small scale appropriate for mini-mills. Being nearer to the final dimensions of hot rolled coil and immediately rolled hot, instead of being allowed to cool for storage and/or shipment before subsequent rolling, thin slab saves energy over the traditional process of rolling thicker reheated slab.

Thin strip casting

A technique to produce 1-2mm thick steel coil direct from the caster, which avoids the need for lengthy tandem mill rolling lines needed even for reducing 50-60mm thin slab to final gauge. A single stand can reduce the direct cast coil to strip less than 1mm thick. The thin cast strip is formed by pouring molten steel between two very rapidly cooled horizontal counter-rotating rolls. The steel has begun to freeze (solidify) when it emerges from the rolls. Already used for some commercial steel production, but still a relatively new technology undergoing further assessment of its future steel product applications.

Tick

The minimum permitted price fluctuation between one trade and the next on a futures market.

Time decay

Expression covering the passage of time while a position or option is open.

Tin-free steel

This is thin steel as used as the substrate for tinplate but instead coated with chrome. It is more accurate to call it electrolytic chrome-coated steel or ECCS.

Tinplate

Cold rolled, mild steel (unalloyed) sheet, on which tin is deposited electrolytically, on one or both sides, to prevent corrosion. It is usually as thin as 0.17-0.49mm, but may be 'double reduced' to 0.14-0.29mm, Coating weights vary from 1g/sq m to 10g/sq m per side. It is most often used for food packaging (tin cans), in which case the inner face has an additional coating or coatings of polymer or resin.

Toll rolling (toll processing)

Mills with more rolling capacity than steel of their own to roll may undertake rolling for other steelmakers short of capacity on a tolling basis, charging per tonne of throughput, without taking ownership of the steel. This is sometimes referred to as 'hire rolling'. Some independent coating lines also operate on a tolling basis.

Tom-Next

Within the LME's normal two day settlement, a position may nevertheless have a prompt date one day forward. It can still be officially traded up to the first ring of that day under a facility known as Tom(orrow)-Next(day). This permits such positions to be rolled forward to the official cash date on payment of a negotiated premium.

Ton-mile

Standardised unit of transport cost.

Tool steel

Steel with strength, fatigue, toughness and corrosion resistance suitable for manufacturing tools. See also high speed steel.

Torpedo ladle (torpedo car)

This is the normal shape of vessels used to move liquid iron between the blast furnace and the converter, having a massive central section tapering at both ends. This design is used for insulation and mechanical reasons, as the vessels must maintain the temperature of their contents as well as contain great weight.

Totter

English word for an itinerant scrap buyer, a first point on the collection chain.

Toughness

The property of a metal, mostly steel, to have high strength without associated brittleness.

Tough pitch

Copper which has its oxygen content controlled to give it the best electrical characteristics is said to be tough pitch.

Traded Option

An option contract based on standardised terms which can be traded to third parties or on an Exchange. The standard LME options contracts, structured on a strike price on a particular day, are traded option contracts. See also Tapo.

Transaction

A single trade. Can be of multiple but identical contracts.

Transaction price hedge

A hedge designed to protect an open physical position against an adverse price movement while the postion is open. See also Price-fix hedge.

Transfer

Sometimes erroneously called give-ups, transfers are a process whereby a client instructs one of his LME brokers to transfer responsibility for an open cleared position to another of his brokers for the sake of strengthening his open position with the latter broker.

Transfer price

A calculated price assigned to intermediate goods transferred between partner companies or subsidiaries. Within a group it can provide a predictable basis for pricing that maintains more consistent cost relationships between upstream and downstream sections. In partnerships it can provide a transparent and fair way of allocating costs and profits. However, cross-border companies are sometimes criticised for using transfer pricing deliberately to locate profits in low taxation administrations and to create losses artificially in high taxation countries.

Treatment charge

See T/C.

Tube

An open cylinder of steel used for its structural properties in construction or as a conduit for fluids. See seamless tube, welded tube, OCTG, ERW and spiral welded tube.

Tube shell

A short, thick-walled tube for subsequent drawing down to finished size. See also billet.

Tundish

Liquid steel is poured from the converter or furnace into a tundish and held ready for feeding in a controlled flow into a continuous casting line.

Tungsten carbide

Chemical symbol WC. The hardest known material after diamond - used in cutting tools.

Turnings

Scrap from machining in a lathe. Turnings, especially of steel, are longer than swarf and often harder to handle.

A refining operation in which molten steel is transferred to a vacuum (steel in a ladle is covered and air is pumped away). In the absence of atmospheric pressure gases dissolved in the steel (particularly hydrogen) are released.

Value

An LME term referring to a price which has been traded in a volume sufficient to satisfy all the current buyers and sellers at that price.

VAR

Value at Risk. Technique used by banks to evaluate the risk of loss on an open position by reference to historic figures.

Variation margin

A payment made on a daily basis based on the adverse price movement in a position carried by a market participant. Variation margin is required to bring the account back up to the initial margin requirements. Additional funds may be requested (a margin call) to cover any losses on an open position, based on current market values (mark to market). Variation margin is assessed by the clearing house and called for on a daily basis. An open LME position which is in profit against the current market has a positive margin, which can be used in assessing a client's credit position. On some cash cleared markets positive margin can be paid out to a client whose open position is in profit.

Vega

Denotes changes in the value of an option as influenced by volatility in the relevant market.

Virgin metal

Primary metal produced from ore.

VOD

Vacuum Oxygen decarburisation. A process for cleaning steel in the ladle by simultaneously placing it under vacuum and blowing with oxygen.

Volatiles

As mined, coal is a complex mineral and some of the elements and compounds released on heating are highly reactive and even potentially explosive. These are undesirable in the blast furnace reaction; coking coal or metallurgical coal is selected (among other characteristics) on the basis of its low content of volatile elements and compounds. These are then driven off by pyrolysis in a coking oven.

Volatility

The propensity of a market or price to fluctuate widely and/or suddenly. See also standard deviation.

Volume

The total weight of a commodity traded, expressed either in tonnes or lots. Also referred to as turnover. Measured per session, day, month or year.

(i) Bearer document. Certificate of physical deposit, which gives title to physical metal in an exchange-approved warehouse. When physical metal is removed from the exchange's warehousing network the warrant is cancelled. (ii) The document of title to metal stored in an LME registered warehouse. It takes the form of centrally-maintained electronic records under the LME's SWORD system. See also Lot.

A further development by steelmakers beyond supplying conventional oiled blanks to carmakers' panel shops. For example, more strength (or more flexibility) can be required of some portions of a car door (such as around the hinge or door handle) than others. Consequently, in the interests of saving weight and/or costs, it may be desirable to use different steels for different portions. By using computer-controlled laser welding equipment, a welded blank can be made from two or more pieces of different steel (in grade and/or thickness) of relatively complex shape by joining at their edges before subsequent stamping. See also tailored blank.

Welded tube

(i) Small-diameter steel or aluminium tube roll-formed from strip and longitudinally HF welded. (ii) Large-diameter steel tube formed from plate and welded. See also ERW and Spiral welded tube.

White goods

The category of domestic appliances (refrigerators, ovens, washing machines, dishwashers etc.) that forms an important sub-sector of the market for steel flat products.

Wire

Strand made from wire rod by drawing through a succession of dies until reduced to the desired gauge (diameter).

Wire rod

(i) Steel; Product of first rolling of billet intended for further rolling and drawing to wire. Mesh-grade is the basis for welded reinforcing mesh for concrete or can replace rebar (ii) Non-ferrous; Raw material, commonly 8mm in diameter, for subsequent drawing to wire. Usually produced continuously by casting and rolling. See also Properzi.

Wire rope

Wire strand twisted together forms wire rope.

Wood's metal

Alloy which melts at less than the temperature of boiling water. Contains lead, tin, bismuth and cadmium.

Work rolls

A stand rolling down the gauge of a piece of steel comprises at least one pair of work rolls, which come directly into contact with the steel being worked, and corresponding back-up rolls, which prevent the work rolls from bowing or bending under the enormous forces involved in shaping steel (especially in cold rolling mills). Some designs of rolling mill have a more complex pattern of supporting back-up rolls. See also Sendzimir..

Writer (options)

The seller of an option.

Wrought iron

Traditional ductile iron with low carbon content (usually less than 0.15%) hammered until malleable. It has superior corrosion resistance to steel; familiar as decorative ironwork, it is often now replaced by ductile steel of low carbon content.

Wrought metal

Metal which has undergone physical deformation during semi-fabrication, eg, sheet, tube and wire. As distinct from raw metal or castings.

Heavy moving equipment such as bulldozers, earth-moving equipment, big mine vehicles, mobile cranes etc. which are typically painted yellow or another high visibility colour. Yellow goods represent a distinct steel-consuming segment, using plate, other heavy gauge steel and special quality bar etc. which affects demand when investment in mining and infrastructure is strong.

Yield

(i) A measure of efficiency of a process stage or complete production chain, often expressed as a percentage. Typically calculated as the weight of steel produced in a given manufacturing step relative to the quantity charged. (ii) The stress at which permanent deformation occurs in a tensile test. In many steels, this point is not readily distinguishable and aproof strength value is used as an alternative.

Oxidised zinc removed from the surface of molten zinc, usually in a galvanizing bath. It is then recycled. See also skimmings.

Zone refining

A process for refining metals, usually semi-conductor metals, to a high state of purity (above four nines). A bar of metal is placed horizontally in a suitably-shaped crucible. A small zone at one end is then induction melted and the zone moved along the bar, carrying the impurities with it. At the other end of the bar, after solidifying, the zone is cut off. The process may be repeated several times for the highest purities.